Leading Economic Indicators and Consumer Sentiment Rise
May 17, 2013
A barometer of future U.S. economic activity rose in April following a drop in March, signaling growth could speed up later in the year.
The Index of Leading Economic Indicators from the private research group The Conference Board, shows a 0.6% gain in April to 95, following a downwardly revised 0.2% drop in March.
“The index is 3.5% higher (annualized) than six months ago, suggesting expansion,” says Ken Goldstein, economist at The Conference Board. “However, the biggest risk right now is the adverse impact of cuts in federal spending. The biggest positive factor is the potential for improvement in the recovering housing and labor markets. The biggest unknown is the resiliency in confidence, both consumer and business.”
The index, used to gauge future economic activity in the next three to six months, is made up of 10 different components, among them:
- average weekly hours for manufacturing;
- average weekly initial claims for unemployment insurance;
manufacturers’ new orders,
- consumer goods and materials;
- consumer expectations for business conditions
A separate report from the University of Michigan shows consumer sentiment about the economy improved, hitting its best level in six years. It rose from a reading of 76.4 in April to 83.7 this month, far higher than a consensus estimate from economists. The optimistic feeling was especially noteworthy in upper-income households.
The reports follow mixed economic reports about the U.S. this week that raised some concerns the American economy was growing slower than it was earlier in the year, but Ataman Ozyildirim, economist at The Conference Board, says “the LEI points to a continuing economic expansion with some upside potential.”