US leading index drops but continues to point towards modest economic growth

A closely-followed gauge of economic activity in the States turned slightly lower at the end of 2019, but continued to point towards growth of around 2.0% in the early part of the current year.

Consultancy Conference Board's index of leading economic indicators for the US fell at a month-on-month pace of 0.3% in December (consensus: 0.2%), although November's print was marked up slightly, from flat to +0.1%.

According to Ataman Ozyildirim, the Senior Director of Economic Research at the group, rising claims for jobless insurance and a decline in housing permits drove December's drop in the LEI.

Offsetting the fourth drop in five months in the LEI, together with continued weakness in indicators for manufacturing, were financial conditions and consumers' outlook for growth, Ozyildirim said, adding that the latter should " support growth of about 2 percent through early 2020".

The 10 indicators included in the LEI were: average weekly hours in manufacturing, average weekly initial claims for unemployment insurance, manufacturers’ new orders, consumer goods and materials, the Institute for Supply Management's sub-ndex of new orders, manufacturers’ new orders for nondefense capital goods excluding aircraft orders, building permits for new private housing units, stockmarket prices for 500 common stocks, the Leading Credit Index, the interest rate spread between 10-year Treasury notes less the federal funds rate, and the average consumer expectations for business conditions.

A separate gauge of so-called coincident indicators meanwhile rose by 0.1% on the month and another of lagging indicators dipped 0.1%.