|
Information
> Financial Terms
> This page
Leading Indicators
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles
J Woelfel
(We recommend this as work of authority.)
The composite
index of leading indicators consists of 12 series that measure marginal
employment adjustments, capital investment commitments, inventory investment
and purchasing, profitability, and money and financial flows.
Descriptions of these series follow.
1.
Average weekly hours of production or nonsupervisory workers
in
manufacEagle Tradersg.
2.
Average weekly initial claims for state unemployment insurance
programs.
3.
Manufacturer's new orders.
4.
Vendor delivery performance.
5.
Index of net business formation.
6.
Contracts and orders for plant equipment.
7.
Index of new private housing building permits.
8.
Change in inventories on hand and on order.
9.
Change in sensitive materials prices.
10.
Index of stock prices (1941-43 = 10).
11.
Real money supply, M2.
12.
Change in business and consumer credit outstanding.
The first two
series measure labor market adjustments and are negatively related series;
as weekly hours/worker increase, new unemployment insurance claims will
decrease. The next two measure
trade orders and deliveries, which are also negatively related series;
as orders increase and delivery systems are strained, delivery performance
suffers. Series five, six
and seven measure fixed capital investments, which are a measure of the
long-term economic outlook and directly follow economic trends.
Series eight profitability by assessing the cost of and returns
to normal business activity. The
last two focus on measures of money and credit availability.
Back to Information
|