Leading, Coincident & Lagging Indicators
Data series that move before, with, or after the business cycle.
What is Leading, Coincident & Lagging Indicators?
Leading indicators turn before the economy does: stock prices, building permits, new manufacturing orders, average weekly initial jobless claims, and consumer expectations. Coincident indicators move with it: nonfarm payrolls, industrial production, personal income, manufacturing and trade sales. Lagging indicators confirm afterwards: average duration of unemployment, the prime rate, commercial loans outstanding, and labor cost per unit of output.
Leading, Coincident & Lagging Indicators: a worked example
Rising building permits and new orders suggest expansion ahead, even while the unemployment rate - a lagging measure - still looks weak.
More terms in Economics & Financial Reporting
Business Cycle
The recurring pattern of expansion, peak, contraction, and trough.
Deflation vs. Disinflation
Falling prices versus a slowing rate of price increases.
Currency Valuation & Exchange Rates
What one currency buys of another, and who wins when it moves.
Sovereign Debt
Bonds issued by a national government.
Trade Deficit
A country imports more goods and services than it exports.
Income Statement
Revenue, expenses, and profit over a period of time.
Balance Sheet
Assets, liabilities, and equity at a single point in time.
Statement of Cash Flows
Where cash came from and where it went: operating, investing, financing.