NEW YORK – A predictor of the nation’s economic performance over the next three to six months fell in February for the fifth straight month, as jobless claims rose while vendor performance, consumer sentiment and the number of building permits all declined, The Conference Board reported today.
The Leading Index fell 0.3 percent last month – to 135.0 points (1996 = 100), from January’s revised 135.4 points – after falling a revised 0.4 percent in January and 0.1 percent in December. The index “has been on a downtrend since the middle of 2007, and the weaknesses among its components have become very widespread in the last three months,” the board said. “The last time the leading index worsened for five consecutive months was in early 2001.”
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The decline matched the 0.3-percent mean prediction from a Bloomberg News survey of 59 economists. (Their expectations ranged from a decline of 0.7 percent to an increase of 0.2 percent.)
Compared with January, four of 10 indicators improved last month: the nation’s money supply (M2), the interest-rate spread, manufacturers’ new orders for non-defense goods and manufacturers’ new orders for consumer goods and materials. But those increases were more than offset by February’s sharp increase in new claims for unemployment insurance and declines in building permits, vendor performance, consumer expectations (measured by the Reuters / University of Michigan Surveys of Consumers’ Consumer Sentiment Index) and stock prices.
“The leading index has declined 1.5 percent – about a 3.0 percent annual rate – during the six-month span from August 2007 through February 2008,” The Conference Board noted in a statement today. “In addition, only two components out of 10 have increased from August to February.”
But the Coincident Index – The Conference Board’s indicator of the current economic climate – was unchanged in February for the third month in a row, at 124.9 points. It also was unchanged compared with August 2007, the board noted, although “the strengths among its components have become less widespread in recent months.”
Reports so far this month – such as the Reuters / University of Michigan Surveys of Consumers’ Consumer Sentiment Index, which dipped 0.4 percent to a 16-year low of 70.5 points (READ MORE), and the rising number of new jobless claims – indicate the Leading Index may continue to decline.
“It looks like we are in a recession,” Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, told Bloomberg Television. “The economy was probably stagnant in the first quarter, and it looks like things got worse at the end of the quarter.”
The Conference Board is a nonpartisan, nonprofit business membership and research organization with offices in New York City, Chicago and abroad. Additional information, including this month’s full Leading Economic Indicators report, is available at www.Conference-Board.org.
