US: Leading Index supports rate hikes, labor market bears watching - Wells Fargo

According to analysts from Wells Fargo, today’s 0.3% in the Leading Economic Index (LEI) for March (third monthly gain in-a-row) suggests continued economic growth through 2018. 

Key Quotes: 

“The LEI continued its upward ascent in March, reaching a series high of 109.0. The index has not posted a negative month-over-month reading since May 2016.”

“The interest rate spread and ISM new orders were the greatest contributors to the headline figure, adding 0.15 and 0.13 percentage points, respectively.”

“The components related to the labor market, initial jobless claims and manufacturing hours worked, shaved off 0.05 and 0.07 percentage points, respectively. This pullback comes on the heels of an encouraging February in which these components were the greatest buoys to the index.”

“The weakness in the labor indicators does not come as much of a surprise given March’s underwhelming nonfarm payroll report.”