Residential Construction Helps Drive First Leading Economic Indicators Upswing in Two Years

The Leading Economic Index (LEI) increased by 0.1% in February to 102.8, marking the first time in two years the business-cycle monitor showed an uptick, thanks in part to residential construction, according to the latest release from The Conference Board.

According to the latest report, the increase follows a 0.4% decline in January. Over the six-month period between August 2023 and February 2024, the LEI contracted by 2.6%—a smaller decrease than the 3.8% decline over the previous six months.

“The U.S. LEI rose in February 2024 for the first time since February 2022,” said Justyna Zabinska-La Monica, senior manager, Business Cycle Indicators, at The Conference Board. “Strength in weekly hours worked in manufacturing, stock prices, the Leading Credit Index™, and residential construction drove the LEI’s first monthly increase in two years. However, consumers’ expectations and the ISM® Index of New Orders have yet to recover, and the six- and twelve-month growth rates of the LEI remain negative. Despite February’s increase, the Index still suggests some headwinds to growth going forward. The Conference Board expects annualized US GDP growth to slow over the Q2 to Q3 2024 period, as rising consumer debt and elevated interest rates weigh on consumer spending.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. rose by 0.2% in February 2024 to 112.3, after a 0.1% increase in January. The CEI rose 1.1% over the six-month period ending February 2024, up from 0.8% over the previous six months. The CEI’s 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. All four components of the index were positive last month, with personal income less transfer payments and payroll employment having the strongest contributions to the Index.

The Conference Board Lagging Economic Index® (LAG) for the U.S. rose by 0.3% in February 2024 to 118.8 (2016 = 100), after a 0.3% increase in January. The LAG is up by 0.8% over the six-month period from August 2023 to February 2024, after recording no growth over the previous six months.

To view the full report, click here.

The LEI index is one of the key elements in an analytic system designed to signal peaks and troughs in the business cycle, constructed to summarize and reveal common turning points in the economy.