Leading indicators index

Release Date: Usually released monthly, about 20 days after the month under review ends
Released By: The US Conference Board

The Leading Indicator Index is a news report published on a monthly basis by the Conference Board used to predict the direction of the economy’s movements in the months to come. The news release is sometimes known as the Index of US Leading Indicators. The index is made up of 10 components that are considered the leading indicators of performance of the US economy, whose changes will precede changes in the overall economy (hence the name “leading). These 10 leading indicators are as follows:

  1. Average weekly hours worked by workers in the manufacturing industry.
  2. Average number of weekly initial applications for unemployment insurance. In other words, the average number of those who have filed for Jobless Claims is one of the leading indicators considered.
  3. Number of new orders placed for consumer goods and materials as well order by the country’s manufacturers.
  4. The speed at which new merchandise are delivered from suppliers to vendors/retailers.
  5. The number of new orders made for capital goods that are not related to the defense industry and also excluding aircraft orders.
  6. The number of new building permits for residential buildings.
  7. The stock prices of the 500 shares that make up the S&P 500 stock index.
  8. The inflation-adjusted monetary supply (M2).
  9. The spread between long-term and short-term interest rates.
  10. The consumer sentiment.

The Index of US Leading Indicators therefore represents data that is used by many economists, traders and investors to gauge what is going to happen in the near future economically. By looking at the Composite Index of Leading Indicators in the context of what the general economic conditions are, investors and businesses can form expectations about what lies ahead for the US economy and make better-informed investment decisions.

Time of Release

The Leading Indicators Index report is usually released monthly, about 20 days after the month under review ends. The data is released on the webpage of the US Conference Board and also on independent news feeds from Bloomberg and Thomas Reuters.

Interpreting the Data

The composite economic indexes are the key elements used to analyze when there are peaks and troughs in the business cycle. They can be used to analyze and reveal common turning point patterns in upcoming economic data in a manner that is smoother and clearer than any individual component.

By carefully studying the individual components of the report, investors and traders can easily tell which sectors of the economy are improving, stagnant or in bad shape.