The Conference Board's US leading indicator index (LEI) declined by 0.5 percent in September, following a revised 0.3 percent drop in August and more than the 0.3 percent decline expected in the Econoday consensus forecast. Over the six-month period between March and September 2024, the LEI dropped 2.6 percent, a larger decline than the 2.2 percent drop over the six-month period between September 2023 and March 2024.

The Conference Board blamed weak new factory new orders, saying it continues to"be a major drag on the US LEI in September as the global manufacturing slump persists." An inverted yield curve, a decline in applications for building permits, and consumers' dour outlook for future business conditions also contributed to the decline.

"Overall, the LEI continued to signal uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025," it said.

The Conference Board US Coincident Economic Index (CEI) increased by 0.1 percent in September after a revised 0.2 percent rise in August. Overall, the CEI is up 0.9 percent in the six-month period ending in September 2024, higher than its 0.5 percent growth rate over the previous six-month period. The CEI's components-payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production-are included among the data used to determine recessions in the US."Payroll employment, personal income less transfer payments, and manufacturing and trade sales contributed positively to the index in September and slightly more than offset a decline in industrial production," the report said.

The Conference Board US Lagging Economic Index fell 0.3 percent in September, after no change in August. The LAG's six-month growth rate contracted by 0.2 percent over the six-month period ending in September, after a 1.1% increase over the six-month period from September 2023 to March 2024.

Forecasters look for another negative showing for the US index of leading indicators, down 0.3 percent on the month, for a seventh consecutive decline. The big negative has been declining new orders, which suggests more weakness ahead.

The index of leading economic indicators is a composite of 10 forward-looking components including building permits, new factory orders, and unemployment claims. The report attempts to predict general economic conditions six months out.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the index of leading indicators, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly -- and causing potential inflationary pressures. The index of leading indicators is designed to predict turning points in the economy -- such as recessions and recoveries. More specifically, it was designed to lead the index of coincident indicators, also now published by The Conference Board. Investors like to see composite indexes because they tell an easy story, although they are not always as useful as they promise. The majority of the components of the leading indicators have been reported earlier in the month so that the composite index doesn't necessarily reveal new information about the economy. Bond investors tend to be less interested in this index than equity investors. Also, the non-financial media tends to give this index more press than it deserves.