Makeup of Leading Economic Indicators Index in U.S. to Change

For the first time since 1996, the components of the U.S. leading economic indicator index will change, according to the New York-based Conference Board.

Gone will be the inflation-adjusted money supply, the Institute for Supply Management’s supplier deliveries gauge, the Thomson Reuters/University of Michigan’s measure of consumer expectations and the Commerce Department’s orders for non- defense capital goods, the private research group said in a statement.

Replacing the money supply will be the Conference Board’s own Leading Credit Index, which aggregates measures of the yield curve, interest-rate swaps and the Federal Reserve’s senior loan officer survey. The ISM’s supplier deliveries gauge will give way to the group’s index of new orders.

Instead of using one measure of consumer confidence, the Conference Board will include an equally weighted average of the Michigan sentiment expectations reading and its own measure. Finally, the capital goods component will be replaced by the one that excludes commercial aircraft.

The Conference Board called it “the first major overhaul” of the LEI since 1996, when the group took over responsibility for the business cycle indicators program from the Bureau of Economic Analysis at the Commerce Department. The changes respond to structural changes in the U.S. economy and are aimed at making the LEI a better predictor of peaks and troughs in the business cycle, the Conference Board said.

The new index will start with the December number coming out on Jan. 26, the group said, and readings will be revised retroactively to 1990.

To contact the reporter on this story: Carlos Torres in Washington at Ctorrres2@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net