The U.S. leading index, a key barometer of economic conditions, fell for the fifth consecutive month in October, The Conference Board reported today.

The leading index now stands at 115.1 (1996=100). Based on revised data, this index decreased 0.3 in October and decreased 0.3 percent in September. During the six-month span through October, the leading index decreased 0.7 percent, with three out of 10 components advancing.

The Conference Board said the weakness in recent months has become more widespread. The major contributors to October’s decline were the real money supply, the interest rate spread, and consumer expectations. However, the recent declines in the leading index have not been large enough nor have they persisted for long enough to signal an end to the current economic expansion.

The coincident index, an index of current economic activity, increased again in October and its growth continues to be widespread. At the same time, real GDP growth picked up slightly to a 3.7 percent annual rate in the third quarter from 3.3 percent in the second quarter.

While the leading index is not yet signaling a downturn in the economy, the growth rate of the leading index has slowed below its long-term trend growth rate. This is consistent with real GDP continuing to grow in the near term, but more slowly than its long-term trend rate.

Three of the 10 indicators that make up the leading index increased in October. The positive contributors – beginning with the largest positive contributor – were average weekly initial claims for unemployment insurance (inverted), manufacturers’ new orders for consumer goods and materials, and stock prices. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, real money supply, interest rate spread, vendor performance, average weekly manufacturing hours, building permits, and manufacturers’ new orders for nondefense capital goods.

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