The composite index of Leading Economic Indicators soared 0.6% in April following a revised 0.2% decrease in March, first reported as a 0.1% dip, the Conference Board reported Friday.
The coincident index gained 0.1% in April after a revised 0.2% slip in March, first reported as a 0.1% fall, while the lagging index rose 0.1% after a revised 0.2% gain in March, first reported as a 0.3% increase.
The LEI stands at 95.0, the coincident index is at 105.6 and the lagging index is at 118.4 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.
"The index is 3.5% higher (annualized) than six months ago, suggesting expansion," said the Conference Board economist Ken Goldstein. "However, the biggest risk right now is the adverse impact of cuts in federal spending. The biggest positive factor is the potential for improvement in the recovering housing and labor markets. The biggest unknown is the resiliency in confidence, both consumer and business."
"After a slight decline in March, the U.S. LEI rebounded in April, led by housing permits and the interest rate spread," said the Conference Board Economist Ataman Ozyildirim. "Labor market conditions also contributed, although consumers' outlook on the economy remains weak. In general, the LEI points to a continuing economic expansion with some upside potential. Meanwhile, the CEI, a measure of current conditions, has returned to a slow growth path, despite declining industrial production in April."
Seven of the 10 indicators that comprise the LEI rose in April: building permits, interest rate spread, average weekly initial claims for unemployment insurance (inverted), Leading Credit Index (inverted), stock prices, manufacturers' new orders for nondefense capital goods excluding aircraft and manufacturers' new orders for consumer goods and materials. Average consumer expectations for business conditions, average weekly manufacturing hours, and the ISM new orders index were negative.
The coincident index saw personal income less transfer payments, employees on nonagricultural payrolls, and manufacturing and trade sales rise in the month. Industrial production was negative.
The lagging index saw positives from average duration of unemployment (inverted) and change in index of labor cost per unit of output, manufacturing. Commercial industrial loans outstanding, change in CPI for services, and ratio of consumer installment credit to personal income were negative. Ratio of manufacturing and trade inventories to sales and average prime rate charged by banks were flat in the month.