US Leading Economic Index(r) slumps in September

The Conference Board's Leading Economic Index® fell 0.2% m/m in September, in line with forecast (-0.2%) and more than the consensus had expected (-0.1%). The August reading was revised lower to 0.0% (initial: 0.1%), such that the index is now up 3.4% y/y (previous: 4.2%). Interest rate spreads (0.2pp) and the leading credit index (0.1pp) continued to contribute positively to the headline reading in September; however, these factors were offset by weaker manufacturing orders (-0.1pp), a shorter manufacturing week (-0.1pp), lower stock prices (-0.2pp) and a drop in building permits (-0.2pp).

The Conference Board's index is heavily weighted towards the goods-producing portion of the US economy, which continues to struggle given the headwinds to manufacturing from a stronger dollar, lower oil prices and soft international demand.

"We expect continued strength in the service sector, which accounts for about three-quarters of overall economic activity, to keep the US expansion intact. That said, if manufacturing conditions continue to deteriorate, the Leading Economic Index® may fall further", says Barclays.