LEI Signals Continued Yet Slower Growth

Staff -- Graphic Arts Online, 11/1/2000

The Conference Board's latest summary of leading economic indicators (LEI) suggests that economic growth in the United States probably will be moderately weaker at the end of 2000 and into early 2001 than it has been for the past three years. But most signs still point to a slower, yet sustainable non-inflationary gains in gross domestic product.

The LEI is a composite measure of 10 widely varied economic indicators that have shown to be reliable indicators of changes in overall economic activity for periods six to nine months ahead. Thus, it's noteworthy that the LEI was at a level only 0.2% higher this August than last year, after growing by a 1.5% to 2.0% rate during the previous year.

Six of the 10 components that make up the LEI fell between July and August of 2000. Over the past three months, the most consistently negative contributors to the index have been the level of new orders to manufacturers of consumer goods and the level of new orders for non-defense capital goods. A softening in orders coming into the pipeline should lead to slower production gains and easing capacity constraints for both material and labor in the months ahead.