March leading economic indicators rises 0.1%, suggesting weak growth ahead

The index of Leading Economic Indicators increased 0.1% in March 2008, the Conference Board announced Thursday (pdf), with the organization adding that weak growth conditions may persist in the second half of 2008.

Economists surveyed by Bloomberg News had expected the index to increase 0.2% in March 2008. The index decreased a revised 0.3% in February 2008 and decreased 0.4% in January 2008.

It was the first rise for the index after five straight monthly declines. Five of the ten indicators that comprise the leading index increased in March 2008. The positive contributors ---starting with the largest ---were: real money
supply, index of supplier deliveries (vendor performance), interest rate spread, average weekly, manufacturing hours, and manufacturers' new orders for consumer goods and materials.

Average weekly initial claims for unemployment insurance made up the largest negative contributor to the index.

Difficult business conditions persist

Economist Glen Langan told BloggingStocks Thursday that even though the index increased slightly in March 2008, ending a a 5-month slide, the statistic still suggests a tough road ahead for the U.S. economy. "It's the smallest of rises, one that's hardly indicative of a reverse in economic trends. The index could resume sliding next month," Langan said. "We had no job growth in the first quarter, declining profits, and a housing sector in a severe correction or worse, so we're staring slow growth or no growth right in the face. Economic conditions and consumer demand in the second quarter are likely to remain challenging, to say the least."

The leading index now stands at 102 (base year is 2004 = 100). During the six-month period through March 2008, the leading index decreased 1.6%, with only three out of ten components advancing.