The latest Conference Board Leading Economic Index (LEI) for January increased to 108.1 from 107.0 in December. The Coincident Economic Index (CEI) came in at 103.0, up from the previous month.

The Conference Board LEI for the U.S. increased for the fourth consecutive month in January. Large positive contributions from building permits and the financial subcomponents were the main drivers of the strong gain. In the six-month period ending January 2018, the leading economic index increased 3.8 percent (about a 7.8 percent annual rate), faster than the growth of 2.3 percent (about a 4.6 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators remain very widespread. [Full notes in PDF]

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

For additional perspective on this indicator, see the latest press release, which includes this overview:

“The U.S. LEI accelerated further in January and continues to point to robust economic growth in the first half of 2018. While the recent stock market volatility will not be reflected in the U.S. LEI until next month, consumers’ and business’ outlook on the economy had been improving for several months and should not be greatly impacted,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The leading indicators reflect an economy with widespread strengths coming from financial conditions, manufacturing, residential construction, and labor markets.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage-off the previous peak for the index and the number of months between the previous peak and official recessions.