Economic Indicators

My leading economic indicator composite declined again
in September, and is now sharply below the interim
cycle high seen in June. The data do imply that the
economy should expand slowly. The major reason for the
drop off in the composite since June reflects sharp
declines in the breadth of new orders for both the
manufacturing and services sectors. The same pattern
is repeated for the global indicators, signaling that
worldwide economic growth should slow further as the year
winds down. The trends are not healthy, but there are no
tangible signs of recession yet, either.

With the magic of data revision, the decline in US payroll
jobs originally reported for August has been replaced by
a reasonable net gain to compliment the 110K jobs allegedly
added in September. Wouldn't you know that the error for
August made it easier for the Fed to cut the FFR% on 9/18.
It is OK to cook the books once in awhile, but the employment
data is getting sloppier than normal. The more positive
jobs data for recent months will ease talk of recession and
may prevent the Fed from being pushed into another rate cut.

The short and longer term inflation indicators are rising,
signaling increased inflation pressure ahead. Main culprits are
oil and agriculturals.