Free Trial
USDCAD TECHS

Trend Outlook Is Bullish

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Leading Indicator May Point To Growth Peak

US OUTLOOK/OPINION

The Conference Board's Leading Index for April disappointed, coming in at -0.3% M/M vs a flat reading expected - and prior was revised down to +0.1% from +0.3%.

  • As the name implies, the LEI is typically a good indicator of the direction of overall US economic growth, with a modest lead (the Conference Board says it anticipates turning points in the business cycle by 7 months - see chart).
  • As such, the flat/negative performance in Mar / Apr bodes ill for growth in mid-year, and for now the March index high of 119.50 remains the high of the current cycle.
  • There may be a few reasons to see April's weak reading as an aberration: one of the 10 components that go into the indicator, initial jobless claims, rose in April vs March, but from a 50+-year low up to still-low levels - so not exactly weak.
  • That's not to say a higher figure should be expected in May. The S&P 500 component was flat in April on average vs March but equities have dived in May; also, building permits and weak consumer confidence weighed in April and that could easily be repeated going forward.
  • Overall, the next couple of months' LEI could and likely will offer further evidence that US economic activity has peaked.

Source: Conference Board

225 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

The Conference Board's Leading Index for April disappointed, coming in at -0.3% M/M vs a flat reading expected - and prior was revised down to +0.1% from +0.3%.

  • As the name implies, the LEI is typically a good indicator of the direction of overall US economic growth, with a modest lead (the Conference Board says it anticipates turning points in the business cycle by 7 months - see chart).
  • As such, the flat/negative performance in Mar / Apr bodes ill for growth in mid-year, and for now the March index high of 119.50 remains the high of the current cycle.
  • There may be a few reasons to see April's weak reading as an aberration: one of the 10 components that go into the indicator, initial jobless claims, rose in April vs March, but from a 50+-year low up to still-low levels - so not exactly weak.
  • That's not to say a higher figure should be expected in May. The S&P 500 component was flat in April on average vs March but equities have dived in May; also, building permits and weak consumer confidence weighed in April and that could easily be repeated going forward.
  • Overall, the next couple of months' LEI could and likely will offer further evidence that US economic activity has peaked.

Source: Conference Board