LEI Continues to Show Strength

Tim Quinlan Wells Fargo

Coming on the heels of a 0.5 percent increase in December, the LEI index jumped 0.6 percent in January, its fifth consecutive monthly increase. The broad-based gains suggest further economic growth.

Leading Economic Index Jumps in January

The LEI index increased 0.6 percent in January, its largest monthly gain since December 2014. The headline reading bested the consensus forecast, which called for a slightly more modest 0.5 percent growth rate.
The gains were broad based, with only a single component subtracting from the headline figure (non-defense capital goods ex-air).

Interest Rates Continue to Buoy the Index

Leading the gains were the interest rate spread and building permits, which boosted the index by 0.20 percentage points and 0.14 percentage points, respectively.
Also contributing to the headline figure was initial jobless claims (0.13 percentage point contribution) and the ISM new orders index, which added 0.10 percentage points, its first back-to-back monthly contribution since the end of 2014.

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Author

Tim Quinlan

Wells Fargo

Tim Quinlan is an economist for Wells Fargo. Based in Charlotte, N.C., he provides analysis and commentary on U.S. business spending as well as macroeconomic developments in foreign economies.

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