Definition: The index of leading
economic indicators (LEI) is intended to predict future economic activity.
Typically, three consecutive monthly LEI changes in the same direction
suggest a turning point in the economy. For example, consecutive negative
readings would indicate a possible recession.
Related Indicators: Lagging Index, Coincident Index
Source: Conference Board
Availability: Four to five weeks following the reported month
Timing: Leading indicator
Likely Impact of Financial Markets:
Interest Rates: The LEI has little impact on bond prices and interest rates
Stock Prices: The LEI has little impact on stock prices
Exchange Rates: Same
Ability to Affect Markets: Small as most components of the index have been already published by the time the index is published
Analysis of the Indicator:
The index of leading economic indicators (LEI) is a composite of the following 11 leading indicators:
Average workweek (manufacturing)
Initial unemployment claims
New orders for consumer goods
Plant and equipment orders
Change in unfilled durable orders
Sensitive material prices
Stock prices (S&P 500)
Index of consumer expectations
While the LEI is an important forecasting tool, it has little impact
on the bond market, because most
of its components are published prior to its release.
Conference Board Page on Leading Economic Indicators.