Leading indicator plunges
Indicator raises spectre of recession
AS FEARS OF A recession in the United States intensify, some of the data emanating from official US statistics agencies looks worrying. One example is the US leading indicator, compiled by the Conference Board. A leading indicator is a composite business cycle indicator that’s derived by using different sets of statistics to arrive at one indicator that provides an indication of the economy’s future path. Examples include building plans passed and credit extension: if those expand, they suggest a future expansion in economic activity.
In August this year the US leading economic indicator fell a further 0,5% month-on-month, with only four of the 10 components that make up the indicator rising during the month. The decrease in August was larger than expected, which was for a decline of only 0,2%, according to Bloomberg. Stanlib economist Kevin Lings says it’s the third decline in the index over the past four months.
The decline in August was led by a further fall-off in building permits.
That rate of decline is similar to that recorded during the previous two US recessions, in 2001 and 1991.