LEADING INDICATORS HIT RECORD HIGH IN JUNE.Byline: Associated Press An index of future economic activity rose more than expected in June to reach its highest level ever, but the advance did little to rekindle fears of an interest rate increase. The Conference Board reported Monday that its Index of Leading Economic Indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. rose 0.5 percent in June, following a revised 0.2 percent gain in May and a 0.3 percent increase in April. Wall Street had been expecting a more muted June increase of 0.3 percent. Economists said the unexpected strength was not enough to sway them from the recently drawn, general conclusion that the Federal Reserve would leave interest rates unchanged at its Aug. 20 policy meeting. Signs of a surging economy could revive inflation fears and lead the nation's central bank to raise rates. ``This will not affect the Fed's deliberation. I don't think the Fed is going to move,'' said Stephen Roach, chief economist at Morgan Stanley & Co. ``A lot of us, including myself, changed our view of the Fed.'' Of the leading index's 11 components, six rose in June. The biggest gains came from changes in sensitive materials prices, the performance of retail vendors, consumer expectations and money supply Money Supply The entire quantity of bills, coins, loans, credit, and other liquid instruments in a country's economy.Notes: Money supply is divided into three categories--M1, M2, and M3--according to the type and size of account in which the instrument is kept. The money supply is important to economists trying to understand how policies will affect interest rates and growth. See also: M1, M2, M3, Monetary Policy, Narrow Money, Velocity . Components hurting the most were unfilled durable goods orders and orders for plant and equipment. The June reading of 102.9 compares with 102.4 in May and a revised 102.2 in April. The index operates off a base of 100, set in 1987. Two sister indexes, the coincident and lagging Lagging Strategy used by a firm to stall payments, normally in response to exchange rate projections. indexes, were mixed. The index of coincident indicators Coincident indicators Economic indicators that give an indication of the current status of the economy. Coincident Indicator An economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy.Notes: Some examples include nonagricultural employment, personal income, and industrial production. See also: Business Cycle, Indicator, Lagging Indicator gained 0.5 percent in June and the lagging indicators index fell 0.1 percent for the month.
Lagging Indicator A measurable economic factor that changes after the economy has already begun to follow a particular pattern or trend.Notes: Lagging indicators Lagging indicators Economic indicators that follow rather than precede the country's overall pace of economic activity. See also: Leading indicators and coincident indicators. confirm long-term trends, but do not predict them. Some examples are unemployment, corporate profits, and labor cost per unit of output. Interest rates are another good lagging indicator rates change after severe market changes., Leading Indicator |
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