U.S. Economic Outlook Improves, Although Growth Concerns Persist

By Ed Frankl

A key indicator of U.S. economic momentum rose in February for the first time in two years driven by a manufacturing uptick in employment and a buoyant stock market.

The Conference Board said Tuesday that its Leading Economic Index, or LEI, rose 0.1% to 102.8 in February, the first increase since the same month of 2022, having fallen 0.4% in January.

The index had been expected to fall marginally by 0.1%, according to a consensus of economists polled by The Wall Street Journal.

"Strength in weekly hours worked in manufacturing, stock prices, the Leading Credit Index, and residential construction drove the LEI's first monthly increase in two years," said Justyna Zabinska-La Monica, senior manager for Business Cycle Indicators at The Conference Board.

However, there remain some headwinds to economic activity going forward, with growth set to slow in the second and third quarters of 2024 as increased consumer debt and high interest rates weigh on spending, she said.

It comes after The Conference Board's metric for consumer confidence dipped slightly in February, bucking a three-month trend of improving sentiment, according to data released late last month.

Over the period from August 2023 to February this year the LEI also contracted 2.6%, although that was a smaller fall than the 3.8% over the prior six months.

The LEI is a predictive variable that anticipates turning points in the business cycle by around seven months. The indicator is based on 10 components, among them initial claims for unemployment insurance, manufacturers' new orders, building permits of new private housing units, stock prices and consumer expectations. It is intended to signal swings in the business cycle.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

March 21, 2024 10:33 ET (14:33 GMT)

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