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U.S. Leading Economic Index Points to Further Economic Recovery in November

An economic index that measures U.S. business cycles rose in November, suggesting the economy continued to grow, according to data from the Conference Board released Monday.

The Leading Economic index increased 1.1% to 119.9 in November compared with the previous month, above the 0.9% rise forecast from economists polled by The Wall Street Journal.

The index also rose by 0.9% in October, so November’s data signals that economic growth gathered momentum despite growing Covid-19 cases.

The Conference Board Leading Economic Index is based on 10 components, among them initial claims for unemployment insurance, manufacturers’ new orders, building permits of new private housing units, stock prices and consumers expectations. It is intended to signal swings in the business cycle and to smooth out some of the volatility of individual indicators.

November’s rise was supported by positive contributions from eight of 10 components, the Conference Board said.

The indices contributing positively to the rise were average weekly initial claims for unemployment insurance, stock prices, the interest rate spread, the ISM New Orders Index, building permits, the Leading Credit Index, average weekly manufacturing hours, and manufacturers new orders for consumer goods and materials.

The only negative contributor was average consumer expectations for business conditions, while the manufacturers’ new orders for nondefense capital goods held steady in November, the report said.

Over the six-month span through November, the leading economic index increased 4.6%, with seven out of ten components advancing. The index has increased for nine consecutive months.

The Coincident Economic Index, a measure of current economic activity, increased 0.3% in November to 106.7.

“Taken together, the current behavior of the composite indexes and their components suggests that the expansion in economic activity will continue in the near term,” the Conference Board said.

The Lagging Economic Index fell 0.1% to 107.2, the report said.
Source: Dow Jones

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