The Conference Board US Leading Economic Index Trends Lower in January

On Thursday, the Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released is US Leading Indicators for January.

The Leading Economic Index (LEI) declined 0.3% to a reading of 101.5 (2016=100) in January, after a 0.1% increase in December (upwardly revised from an initial estimate of -0.1%). Overall, the LEI recorded a 0.9% decline in the six-month period ending in January, much less than its 1.7% decline over the previous six months.

The Coincident Economic Index (CEI) rose 0.3% to a reading of 114.3 (2016=100) in January, following a similar increase of 0.3% in December. As a result, the CEI rose by 1.0% over the six-month period between July 2024 and January, close to its 0.9% growth over the previous six months. The CEI’s four component indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—are included among the data used to determine recessions in the US. They all improved in January, with the largest positive contribution coming from industrial production for the second consecutive month. This was followed by personal income less transfer payments, manufacturing and trade sales, and payroll employment.

The Lagging Economic Index (LAG) increased 0.5% to a reading of 119.3 (2016=100) in January, after no change in December. As a result, the LAG’s six-month change turned positive, 0.3% growth, for the first time since last summer.

In remarks accompanying the report, Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators at the Conference Board, said:

“The US LEI declined in January, reversing most of the gains from the previous two months. Consumers’ assessments of future business conditions turned more pessimistic in January, which—alongside fewer weekly hours worked in manufacturing—drove the monthly decline. However, manufacturing orders have almost stabilized after weighing heavily on the Index since 2022, and the yield spread contributed positively for the first time since November 2022. Overall, just four of the LEI’s 10 components were negative in January. In addition, the LEI’s six-month and annual growth rates continued to trend upward, signaling milder obstacles to US economic activity ahead. We currently forecast that real GDP for the US will expand by 2.3% in 2025, with stronger growth in the first half of the year.”