The Conference Board’s leading economic indicator continues to point toward a reflation of the economy from the shock of the pandemic. The board’s Leading Economic Index, released on Monday, showed a monthly gain of 0.5% in January to 110.3, continuing a string of increases.
We expect a 6.1% rate of growth in the American economy this year. But even with these gains, the leading indicator for the second month in a row reported a decline of 1.5% on a year-over-year basis, highlighting the magnitude of the pandemic’s economic shock last spring. That corresponds to January’s 1.8% year-over-year decline in industrial production.
But the bright spot in the report appears to be the recovery of the manufacturing sector.
Growth of nondefense new orders in inflation-adjusted terms — a forward-looking measurement — grew by 6.3% in January relative to January 2020, after growing by 6.5% during the last quarter of 2020. Still, the level of new orders in real terms remains lower than in 2013.
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