Lead­ing in­di­ca­tor plunges

In­di­ca­tor raises spec­tre of re­ces­sion

Finweek English Edition - - Economic Trends & Analysis - GRETA STEYN

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.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.