September Leading Indicators

- by New Deal democrat

Despite the rotten payroll and other numbers last week, it looks like the September Index of Leading Economic Indicators will print positive, for the 6th positive month in a row. The 10 indicators, with the weights given each indicator, are as follows:

- real money supply (35%)
- average weekly manufacturing hours (25%)
- interest rate spread (10%)
- manufacturers' new orders for consumer goods (8%)
- supplier deliveries (7%)
- stock prices (4%)
- consumer expectations (3%)
- building permits (3%)
- average weekly initial claims for unemployment insurance (inverted) (3%)
- manufacturers' new orders for durable goods (2%)

Here's my estimate of how each fared for September. The 7 positives were:

The yield curve is still positive, although slightly less so: +.30
Consumer nondurables up: +.06*
ISM deliveries up slightly +.03
Stocks' 3 month gain is worth +.05
Consumer sentiment adds +.20
Housing permits are worth about +.02
Initial jobless claims were much better:+.15

The 3 negatives were:

Real M2* has been trending slightly negative, so -.02
Aggregate hours in manufacturing down: -.06
Durable goods' plummeted: -0.10*

*These will be used to revise August and estimate September.

Bottom line: it looks like September Leading Economic Indicators (and revisions to August) will net about +0.6, the sixth positive reading in a row. For the last 6 months, LEI will be up ~5.2. Year-over-Year, LEI will be up ~2.5.