Leading indicators index: Moving forward, but moderate momentum

Scott Kitun/The Medillian

Scott Kitun/The Medillian

The Conference Board Leading Economic Index rose slightly in January, forecasting a slow but steady growth for the nation’s economy.

The Index rose 0.2 percent in January to 94.1, down from a 0.5 percent rise in December.

“The indicators point to an underlying economy that remains relatively sound but sluggish,” Ken Goldstein, economist at The Conference Board said.

For consecutive months, the index rose, suggesting a slow but deliberate expansion in economic activity. Manufacturers’ new orders and consumer expectations were weak in January, but improvements in housing permits and financial components contributed to the modest index boost.

“Credit use has picked up, driven in part by relatively strong demand for auto loans. The biggest positive factor is housing. The housing market is now at twice the level reached during its recessionary lows,” Goldstein said.

The index is constructed to identify turning-point patterns in economic data in a more efficient manner than any individual components.

The leading economic index is a composite average of several individual leading indicators. Some of those indicators include manufacturers’ new orders, nondefense capital goods excluding aircraft orders and building permits.

“The higher probability that sequestration will be realized means U.S. growth in 2013 likely will be about a quarter point slower than previously estimated,” Michael Feroli, chief U.S. economist at JPMorgan Chase in New York, said in a Feb. 14 research note.

The Standard & Poor’s 500 Index fell 0.7 percent to 1,500.89 following the release of the Conference Board Leading Economic Index.

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