Economic growth holds steady

The Conference Board today announced that the U.S. leading index was unchanged in February from the previous month.

The leading index now stands at 115.1 (1996=100). Based on revised data, this index increased 0.4 percent in January and increased 0.4 percent in December. During the six-month span through February, the leading index increased 1.7 percent, with eight out of 10 components advancing (diffusion index, six-month span equals 80 percent). The leading index is increasing at a 3 percent to 4 percent annual rate, and this growth continues to be widespread.

Six of the 10 indicators that make up the leading index increased in February. The positive contributors – beginning with the largest positive contributor – were real money supply, vendor performance, average weekly manufacturing hours, stock prices, manufacturers’ new orders for consumer goods and materials, and manufacturers’ new orders for nondefense capital goods. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), building permits and interest-rate spread.

The upturn in the leading index since March 2003 has been signaling stronger economic growth, and real GDP growth picked up to a 6.1 percent annual rate during the second half of 2003. While the growth rate of the leading index has slowed somewhat in recent months, it is still signaling relatively strong economic growth in the near term.