The U.S. leading index, a key barometer of economic conditions, decreased 0.2 percent in February, ending a four-month uptrend, the Conference Board reported today.

The leading index now stands at 139. Based on revised data, this index increased 0.5 percent in January and increased 0.3 percent in December. During the six-month span through February, the leading index increased 1.5 percent, with eight out of 10 components advancing.

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

The leading index has been fluctuating around a more moderate upward trend since mid-2004. At the same time, real GDP growth slowed to a 1.6 percent annual rate in the fourth quarter of 2005. The current behavior of the leading index still suggests that the sluggish growth in the fourth quarter should not persist, and economic growth is likely to pick up in the near term.

The coincident index, a measure of current economic activity, increased in February, and it has increased in five of the last six months. In addition, strength among its components has been widespread in recent months.

The Conference Board is a nonprofit research and business group.


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