LEI Falls; First Time Since September

The index of U.S. leading economic indicators decreased 0.4% in April in its first drop since September 2001, the Conference Board said Monday.

The index is closely watched by trucking companies because it is a key gauge of economic activity and forecasts business activity for the next three to six months.

The 0.4% decrease followed a 0.1% increase in March and the leading index now stands at 111.7. Still, the board said the index is showing signs of moderate economic growth.

Economists were expecting a 0.2% decline, Bloomberg reported.

Real money supply, which shrank for the second consecutive month, and falling stock prices are the primary components that caused the drop, the board said.

Also contributing to the decline were the index of consumer expectations, average weekly initial claims for unemployment insurance and interest rate spread (the difference between the Fed funds rate and the yield on a 10-year Treasury bond).

The three positive contributors to the index were vendor performance, building permits and manufacturers' new orders for nondefense capital goods. Average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials were unchanged in April.

The index of coincident indicators, a gauge of the current state of the economy, rose 0.2% in April after rising 0.1% in March. The index of lagging indicators fell 0.4% last month, compared with a 0.9% decline the prior month.

The New York-based Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.

(Click here for the full press release.)

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