The composite index of Leading Economic Indicators grew 0.2% in January following an unrevised 0.5% gain in December, the Conference Board reported Thursday.
The coincident index grew 0.4% in January after a revised 1.0% climb in December, first reported as a 0.2% gain, while the lagging index rose 0.4% after a revised 0.1% rise in December, first reported as a 0.7% increase.
The LEI stands at 94.1, the coincident index is at 106.5 and the lagging index is at 116.7 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 indicators point to an underlying economy that remains relatively sound but sluggish," said the Conference Board economist Ken Goldstein. "Credit has picked up, driven in part by relatively strong demand for auto loans. The biggest positive factor is housing. The housing market is now at twice the level reached during its recessionary lows, and will likely continue to improve through the spring, delivering some growth momentum to the labor market and the overall economy. The biggest risk, however, is the adverse impact of cuts in federal spending."
"The U.S. LEI rose again in January, pointing to a slow but continued expansion in economic activity in the near term," said the Conference Board Economist Ataman Ozyildirim. "Despite continued weakness in manufacturers' new orders and consumer expectations, improvements in housing permits and financial components helped boost the LEI in January. Meanwhile, the CEI also advanced in January, despite the slight decline in industrial production. Both the LEI and CEI have experienced widespread gains among their components over the past six months."
Six of the 10 indicators that comprise the LEI rose in January: interest rate spread, stock prices, Leading Credit Index (inverted), average weekly initial claims for unemployment insurance (inverted), building permits and manufacturers' new orders for consumer goods and materials. Average consumer expectations for business conditions, average weekly manufacturing hours, the ISM new orders index, and manufacturers' new orders for nondefense capital goods excluding aircraft 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 commercial and industrial loans outstanding. Ratio of consumer installment credit outstanding to personal income, change in index of labor cost per unit of output, manufacturing, and the ratio of manufacturing and trade inventories to sales were negative. The average prime rate charged by banks and change in CPI for services were flat in the month.