Conference Board's Leading Economic Index takes surprise jump
OECD chief says U.S. recovery will come before others
By Dave Hannon -- Purchasing, 5/22/2009 9:30:00 AM
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The Conference Board’s Leading Economic Index (LEI) took a somewhat surprising 1% jump up in April, its first increase in more than seven months. And the news came on the same day that the head of a global economic group provided more positive tones.
The index’s jump was driven by upticks in seven economic indicators: stock prices, interest rate spread, the index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance) and manufacturers' new orders for consumer goods and materials.
According to a Conference Board analysis, “the LEI for the U.S. has been generally falling since the middle of 2007, but the pace of its decline has slowed substantially in recent months. With this month's sharp and widespread increase, the six-month decline in the index is at its slowest since the fourth quarter of 2007.”
“The leading indicators suggest that while the recession will continue in the near term, the declines will be less intense,” said Ken Goldstein, an economist at The Conference Board.
The news prompted at least one economist to proclaim that, “We’ve moved away from the abyss.” But David Semmens, an economist at Standard Chartered Bank in New York says it’s a step in the right direction, but only an early step. “The economy is going to stay very anemic,” Semmens told Bloomberg. “The labor market is just very weak, and people aren’t going to have the access to credit that they previously had.”
In other economic news, the head of the Organization for Economic Cooperation and Development (OECD) said this week the global economy could begin to recover by year-end and the U.S. would recover before Europe. Angel Gurria cited the U.S. stimulus plan for speeding its pace to recovery.
“The rate of the slowdown is easing; we're no longer in a free fall,” Gurria said. “The (stimulus) packages in Europe aren't as big as in the United States, which is why the States is recovering quicker and the crisis is closer to its end.”
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