Web Trader MT5
Leading economic indicators are data series that tend to change before the wider economy does, offering an early read on where growth is heading rather than confirming where it has already been. The best-known example is the Conference Board’s Leading Economic Index for the US, a composite that blends ten separate inputs into a single figure designed to help anticipate potential turning points in the business cycle by several months.
Its components include things that naturally move ahead of activity: building permits, new orders for manufacturers, average weekly jobless claims, stock prices, the yield curve, and consumer expectations, among others. Bundling them together smooths out the noise in any single series. Traders and economists watch the index for signals that a slowdown or recovery may be forming.
Example: When the Leading Economic Index falls for several consecutive months while jobless claims climb and building permits sag, analysts start warning that a recession may be on the way, although these indicators do not guarantee that a recession will occur, well before the official GDP figures confirm any contraction.
