The U.S. Leading Economic Index (LEI) rose dramatically in December to 112.4 after increasing 1.1 percent in November and 0.4 percent in October, the Conference Board reports.
"While the LEI points to an economic expansion that is gaining further traction, its components still suggest the expansion path may be uneven," said Ataman Ozyildirim, Conference Board economist. "December's gain was led by housing permits, the interest rate spread, initial claims for unemployment insurance, and consumer expectations. The large increases in December and November show that, after a brief pause in the second quarter of 2010, the LEI is resuming the upward trend that began in March 2009."
The increase signifies economic improvement, but the coming months may not offer such smooth sailing.
"The four-month rise suggests the economy now has some wind in its sails; however, it still faces some strong headwinds in the medium-term," said Ken Goldstein, Conference Board economist. "Overall economic activity is likely to continue to gain momentum in 2011."
The LEI considers 10 factors including average weekly hours in manufacturing, average weekly initial unemployment claims, manufacturers' new orders, and building permits for new private housing units.