Nov Leading Economic Index (LEI) Posted Gain

The leading economic index (LEI) posted a 0.6% November gain after a modest upward revision that largely tracked estimates, leaving a seven-month stretch of out-sized increases. We saw prior gains of 0.8% (was 0.7%) in October, 0.7% in September, 1.6% in August, 2.0% in July, 3.1% in June and 3.0% in May. We saw declines of -6.4% in April and -7.4% in March that marked the largest drops on record. The previous record decline was a -3.4% drop in October of 2008. The out-sized May-November LEI rebound after the March-April plunge isn’t telling us much, beyond simply documenting the historically huge magnitude of the rebound.

* Leading indicators rose 0.6% in November, after a 0.8% (was 0.7%) October gain.

* Seven of the ten LEI components contributed positively, led by a 0.20 boost from initial claims.

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* Three components contributed negatively, led by a -0.09 subtraction from consumer expectations.

* The six-month annualized LEI slipped to 19.5% from 25.1% (was 24.7%) in October.

* The y/y LEI rose to -2.2% from -2.7% (was -2.9%) in October.

ABS REPORT

Seven of the 10 components made positive contributions, led by claims (0.20%), new orders (0.19%), building permits (0.17%), and stock prices (0.15%). Declines were registered in consumer expectations (-0.09%), the workweek (-0.07%), and nondefense capital goods orders (-0.02%).

The LEI now sits at 109.1, which is well below the recent-peak of 112.0 in January that matched the 112.0 all-time high back in July of 2019, leaving a seven-month plateau in advance of the global pandemic. The 97.0 trough in April marked the weakest reading since September of 2014.

We expect Q4 growth of 6.5% for industrial production and 6.0% for GDP, following respective Q3 growth of 42.5% and an estimated 33.3% (was 33.1%). This followed respective record contraction rates of -42.6% and -31.4% in Q2, and -6.8% and -5.0% in Q1.

Ruchi Gupta

Ruchi Gupta

Ruchi has an Accounting and Graduate Degree in Business from the International School and Business and Media. She is exceptionally skilled in financial databases like Bloomberg, ThomsonOne,Datastream, CapitalIQ, and Factiva. Her focus at AlphaBetaStock.com is research breaking stocks and investment stories.

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