Economic indicators for both the U.S. and China were positive in April, according to the business research organization the Conference Board, implying an uptick in business activity in both nations. Although economists say continued expansion is indicated, the growth has been led by two of the most volatile markets – real estate and credit – in both economies.
In the U.S., the Conference Board’s Leading Economic Index (LEI) increased 0.6 percent in April to 95.0, following a 0.2 percent decline in March.
The rebound was led by housing permits and the interest rate spread, said Ataman Ozyildirim, economist at the Conference Board. “Labor market conditions also contributed, although consumers' outlook on the economy remains weak. In general, the LEI points to a continuing economic expansion with some upside potential."
"The index is 3.5 percent higher (annualized) than six months ago, suggesting expansion,” said Ken Goldstein, economist at the Conference Board. “However, the biggest risk right now is the adverse impact of cuts in federal spending. The biggest positive factor is the potential for improvement in the recovering housing and labor markets. The biggest unknown is the resiliency in confidence, both consumer and business."
In China, the LEI increased 1.5 percent in April. The Index stands at 260.8, following a 0.6 percent decline in March.
"The LEI for China rebounded in April primarily due to renewed real estate activity and credit expansion,” said Andrew Polk, resident economist at the Conference Board China Center in Beijing. “But both factors remain major wild cards for growth: real estate activity has been volatile recently, and credit has become less effective at boosting the economy. While these drivers may help ease the slowdown in the short-term, the shackle of overcapacity in the industrial sector will remain a drag on the economy."
Both indexes are heavily weighted toward manufacturing activity, including new orders, production and employment.
