Business trends improve in October

November 22, 2017

Keywords: Asset Management

Evidenced by stellar earnings reports and robust job creation, the business environment is quite good in today's economy. And in October, those positive vibes continued, and to a greater degree than what economists predicted, according to newly released data.

LEI reached 130.4 in October
The Conference Board's Leading Economic Index rose 1.2 percent in October to 130.4, just a month removed from a series of intense hurricanes that hammered the business sector, pushing the LEI in September lower for the first time in 2017. The month-over-month uptick was greater than what economists polled by The Wall Street Journal forecast, which was a growth rate of 0.9 percent.

The LEI is a monthly business sentiment trends measure derived from several economic performance indicators, such as building permits, stock valuations, claims for unemployment insurance and hours worked in the manufacturing sector. Manufacturing is responsible for a healthy portion of the overall economy, employing nearly 9 percent of the country's workforce, according to the Economic Policy Institute. The sector took a hit in September, impacted by the triumvirate of hurricanes that affected the Gulf Coast and Southeastern Atlantic in short succession.

Ataman Ozyildirim, The Conference Board's director of business cycles and growth research, noted companies have bounced back nicely in the aftermath of the storms. The LEI's substantial uptick bore this out.

"The US LEI increased sharply in October, as the impact of the hurricanes dissipated," Ozyildirim explained. "The growth of the LEI, coupled with widespread strengths among its components, suggests that solid growth in the US economy will continue through the holiday season and into the new year."

GDP is expected to impress in fourth quarter
With several major indexes having smashed multiple all-time records this year - mainly the Dow Jones but also Standard & Poor's 500 as well as the Nasdaq - observers are expecting the tide will turn. Driven by strong corporate earnings and improved consumer sentiment, the stock market's advancement seems legit, as growth forecasts continue to proliferate. For instance, the Federal Reserve Bank of New York recently projected gross domestic product will swell nearly 4 percent in the fourth quarter, The Wall Street Journal reported. That's up from its previous GDP growth outlook of 3.2 percent. The Federal Reserve Bank of Atlanta is also forecasting a strong showing in the fourth quarter, with GDP up 3.2 percent from the same three-month period in 2016.

Whatever direction the economy takes, Miles Capital remains committed to providing our clients with sage advice that is in alignment with their financial goals. Like the economy, asset management is dynamic, so our services are custom designed to be versatile and flexible.

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