Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI continued to increase in March, pointing to strengthening business conditions in the near term. The March increase was led by the interest rate spread and housing permits components, while consumer expectations dropped. The U.S. CEI, a monthly measure of current economic conditions, also continued to rise, led by gains in industrial production and employment.”
Says Ken Goldstein, economist at The Conference Board: “The U.S. LEI continues to point to sustained economic growth through year end. Global disruptions, including unrest in the Middle East, rising oil prices and the Japan earthquake, may have some repercussions. However, it remains to be seen what the impact of these shocks will be on the United States and the broader global economy.”
Take a closer look at the underlying data:
Click for a large image
While the overall index is up, there are a few points about the data that is concerning.
1.) The average workweek is barely up since last September. Consider that data in light of this chart of the Index of Aggregate Weekly Hours of Production and Non-Supervisory Employees
The total dropped hard during the recession and is still barely recovering, indicating there is still tremendous slack in the labor market that employers can access before adding a bevy of new employees.
2.) Manufacturers new orders for non-defense goods tumbled last month. Consider that in light of the larger durable goods picture.
3.) M2 dropped slightly and the interest rate spread came in slightly.
4.) Consumer expectations took a tumble and accounted for a large percentage of the negative side of the LEI equation. This is probably the result of fuel prices. Here is more information on the situation:
Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.
Capturing what appears to be an abrupt change in attitude, the survey shows that the number of Americans who think the economy is getting worse has jumped 13 percentage points in just one month. Though there have been encouraging signs of renewed growth since last fall, many economists are having second thoughts, warning that the pace of expansion might not be fast enough to create significant numbers of new jobs.