ECRI Leading Indices: Conflicting May Be A Good Sign

September 12, 2011 11:11 am

The ECRI Leading Weekly index turned higher this week. That is a good sign that we may be reaching a slowing of the recent decline. This indicator is a good measure of current activity (lagged a week). The recent upturn may only be a temporary move and may be related to the better ISM service index we saw last week.

The WLI addresses a number of limitations in the widely reported LEI originally developed by ECRI’s founder, Geoffrey H. Moore, for the US Commerce Depart. The WLI resolves these issues by being available promptly and frequently. Specifically, each Friday the WLI is updated with data through the previous week. This is extremely prompt and represents a significant leap forward in the monitoring of economic conditions. In contrast, the LEI is updated only through the month before the previous month.

The ECRI Weekly Growth index, an averaging of the above index, is still showing a sharp decline. Obviously if the ECRI Weekly LEI can hold, this will also stop falling.

While this may only beĀ  a blip, it is good to see that there are some components that are not falling on a continual basis. Even so, it does not appear that the good news may last long considering the overt negativity that is being generated from Europe’s degrading economic condition.

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