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Leading Economic Indicators Grow 0.2% in October

The composite index of Leading Economic Indicators rose 0.2% in October following a revised 0.5% gain in September, originally reported as a 0.6% increase, the Conference Board reported Wednesday.

The coincident index grew 0.1% in October after an unrevised 0.2% climb in September, while the lagging index rose 0.3% after a revised 0.1% dib in September, initially reported as a 0.1% rise.

The LEI stands at 96.0, the coincident index is at 104.8 and the lagging index is at 117.1 The LEI has a baseline of 100, which reflects the level in 2004.

Economists polled by Thomson Reuters predicted LEI would be up 0.2% in the month.

"Based on current trends, the economy will continue to expand modestly through the early months of 2013," said the Conference Board economist Ken Goldstein. "Hurricane Sandy, which is not yet fully reflected in the LEI, will likely adversely affect consumer spending and home building in the short-term, but it's too soon to gauge the net impact. In addition, the outcome of the fiscal cliff debates is another factor which could alter the outlook."

"The U.S. LEI increased slightly in October, the second consecutive increase," said the Conference Board Economist Ataman Ozyildirim. "The LEI still points to modestly expanding economic activity in the near term. Over the last six months, improvements in the residential construction and financial components of the LEU have offset weak consumer expectations, manufacturing new orders and labor market components. Meanwhile, the coincident economic index also increased slightly in October."

Four of the 10 indicators that comprise the LEI rose in October: interest rate spread, , Leading Credit Index (inverted), average weekly initial claims for unemployment insurance (inverted), and manufacturers' new orders for nondefense capital goods excluding aircraft. Building permits, average consumer expectations for business conditions, ISM new orders index, and stock prices were negative. Manufacturers' new orders for consumer goods and materials and average weekly manufacturing hours were unchanged.

The coincident index saw manufacturing and trade sales, employees on nonagricultural payrolls, and personal income less transfer payments all rise in the month. Industrial production was negative.

The lagging index saw positives from commercial and industrial loans outstanding, ratio of consumer installment credit outstanding to personal income, change in CPI for services and the ratio of manufacturing and trade inventories to sales. Change in index of labor cost per unit of output, manufacturing, and average duration of unemployment (inverted) were negative. The average prime rate charged by banks was flat in the month.

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