Economic Blog
December 20, 2019
U.S. leading indicators for November came in flat compared to October, ending a three-month streak of declining values. While investors cheered the end to the skid, the reading was below consensus expectations for a 0.1% increase.
The Conference Board’s Leading Economic Index (LEI), which we include as one of the “Five Forecasters” in our Recession Watch Dashboard, has yet to turn negative this cycle on a year-over-year basis. Investors pay special attention to the year-over-year change in the series, as a dip into negative territory has preceded all nine recessions since 1955.
As shown in the LPL Chart of the Day, the LEI climbed 0.1% year over year, the slowest pace of growth in this economic expansion.
While slowing growth has caught our attention, we believe leading indicators could reach a bottom in the near future. Only two of the LEI’s ten components declined month over month, and the underlying components confirmed what we already knew: The manufacturing sector has weakened from trade tensions. Indicators linked to sentiment and interest rates, however, are starting to turn up, and the announcement of a “phase one” U.S.-China trade deal could bring some relief to manufacturing sector.
“Evidence of a ‘soft landing’ in the domestic economy is starting to appear in indicators we track,” said LPL Financial Chief Investment Strategist John Lynch. “While slowing year-over-year LEI growth is concerning, thawing trade tensions should be positive for leading indicators going forward. We expect the annual change in the LEI to find a bottom right around current levels.”
IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (Member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use | Tracking #1-930094