Leading Economic Indicators

The index of leading economic indicators (LEI) serves as a useful measure of predicting future economic activity. 

It is based on a composite of the following indicators:

• Average Workweek (Manufacturing)
• Stock Prices (S&P 500)
• Initial Unemployment Claims
• Consumer Goods Orders
• Vendor Performance
• Consumer Expectations
• Non-defense Capital Goods Orders
• Building Permits
• Interest Rate Spread
• Real M2

Generally, three consecutive monthly changes in the LEI, all in the same direction, suggests a turning point in the economy. For example, consecutive negative readings would indicate a possible recession.

Although the LEI is an important forecasting tool, because most of it's components are published prior to the LEI being released, it has little impact on the bond market and interest rates.