The composite index of Leading Economic Indicators rose 0.5% in December following a revised unchanged level in November, originally reported as a 0.2% decrease, the Conference Board reported Thursday.
The coincident index grew 0.2% in December after a revised 0.5% climb in November, first reported as a 0.2% gain, while the lagging index rose 0.7% after a revised 0.3% rise in November, first reported as a 0.2% increase.
The LEI stands at 93.9, the coincident index is at 104.9 and the lagging index is at 117.5 The LEI has a baseline of 100, which reflects the level in 2004.
Economists polled by Thomson Reuters predicted LEI would be up 0.3% in the month.
"The latest data suggest that a pickup in domestic growth is now more likely, compared to a few months ago," said the Conference Board economist Ken Goldstein. "Housing, which has long been a drag, has turned into a positive for growth, and will help improve consumer balance sheets and strengthen consumption. However, for growth to gain more traction we also need to see better performance on new orders and an acceleration in capital spending."
"The U.S. LEI rose sharply in December, led by a large improvement in initial claims for unemployment insurance and positive contributions from the interest rate spread and the leading Credit Index," said the Conference Board Economist Ataman Ozyildirim. "The increase in the LEI brought its six-month growth rate well above zero, with roughly two-thirds of the components advancing in the last six months. However, consumer expectations and manufacturers' new orders remain weak."
Five of the 10 indicators that comprise the LEI rose in December: average weekly initial claims for unemployment insurance (inverted), interest rate spread, Leading Credit Index (inverted), stock prices, and building permits. Average consumer expectations for business conditions, the ISM new orders index, and manufacturers' new orders for nondefense capital goods excluding aircraft were negative. Average weekly manufacturing hours, and manufacturers' new orders for consumer goods and materials were unchanged in the month.
The coincident index saw personal income less transfer payments, employees on nonagricultural payrolls, industrial production, and manufacturing and trade sales, all rise in the month.
The lagging index saw positives from commercial and industrial loans outstanding, average duration of unemployment (inverted), 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, was negative. The average prime rate charged by banks was flat in the month.