U.S. Leading Economic Index Shows Continued Growth In October

(RTTNews) - Indicating strengthening conditions in the underlying economy, the Conference Board released a report on Wednesday showing that its reading on leading U.S. economic indicators unexpectedly rose for the fourth straight month in October.

The Conference Board said its leading economic index edged up by 0.2 percent in October after rising by an upwardly revised 0.9 percent in September. Economists had expected the index to come in unchanged.

Kathy Bostjancic, Director of Macroeconomic Analysis at the Conference Board, said, "The modest rise in the Leading Economic Index in October follows the strong advances recorded in the prior two months, which helps lift the six-month annualized growth rate to 5.1 percent from 3.7 percent in the previous six months."

"The recent increase in the index supports our forecast that the U.S. economy is poised to grow somewhat faster at 2.3 in 2014 compared to 1.6 percent in 2013," she added.

The continued increase by the leading economic index reflected positive contributions from seven of the ten indicators that make up the index.

The interest rate spread, building permits, the Leading Credit Index, and the ISM new orders index were among the biggest positive contributors.

The report also showed that the coincident economic index rose by 0.2 percent in October following a 0.3 percent increase in September.

The increase by the coincident index reflected positive contributions from employees on non-farm payrolls, personal income less transfer payments and manufacturing and trade sales.

The Conference Board also said its lagging economic index increased by 0.3 percent in October after rising by 0.5 percent in September.

Positive contributions from the average duration of unemployment, the ratio of consumer installment credit to personal income and the ratio of manufacturing and trade inventories to sales contributed to the increase by the lagging index.

"Overall, the data reflect strengthening conditions in the underlying economy," said Ken Goldstein, Economist for the Conference Board. "However, headwinds still persist from the labor market, accompanied by business caution and concern about federal budget battles."

He added, "The biggest challenge to date has been relatively weak consumer demand, which continues to be restrained by weak wage growth and slumping confidence."