A composite index of leading economic indicators climbed to a record high in April, signaling there is more room for the economy to grow.
The Conference Board said on Thursday that its Leading Economic Index (LEI) jumped 1.6% to a record 113.3 in April, topping the prior record of 112.0 in January 2020. The gain was on top of a 1.3% rise in March and beat the consensus estimate for a 1.4% rise, according to Moody’s Analytics. The index takes into account 10 components of the economy including employment, manufacturing orders, stock prices, credit, interest rates, and consumer expectations.
The strong LEI not only confirms the economy is chugging along at a fast pace, but likely accelerating. Of the 10 indicators in the index, eight increased while two were unchanged. The biggest component pushing up the LEI was jobless claims, which fell more than expected in the latest week to a new pandemic low.
“The U.S. LEI suggests the economy’s upward trend should continue and growth may even accelerate in the near term,” Ataman Ozyildirim, senior director of economic research at The Conference Board, said in a statement.
Economists expect the job market’s continuing recovery to buoy the LEI in the coming months as constraints ease on the labor supply. Health concerns also should fade with more vaccines rolling out, childcare burdens should ease with schools planning to reopen in the fall, and supplemental unemployment benefits will be expiring in September, economists noted.
The Conference Board forecasts that real gross domestic product (GDP) could grow at an annual rate of 8% to 9% in the second quarter, with year-over-year economic growth reaching 6.4% for 2021. Moody’s Analytics is forecasting even stronger annualized GDP growth in the second quarter, at 9.3%.