Hi all – cfa book 3, chapter 18, question 14.
It gives info on a few leading indicators for three periods (which are strengthening) then it gives the overall index value, which is 111 – 115 – 116. The question asks what is likely to happen with the economy in coming months. I said it will expand but at a slower pace (because the rate of increase of the overall index is slowing). the answer just said it will continue growing, and focused on the individual constituents.
So I wanted to check I’m interpreting the index correctly? What would you guys have answered?
The conclusion could be premature . with only 3 months of data its hard to say growth is slowing . . The July number could be temporarily higher than average. But the August number is still verty healthy growth .
For example the Business capital goods growth number for August is actually below the July number , but its a month-on-month growth number , in absolute terms it is still healthy , i.e. that side of the economy is growing in a healthy way
But I am not sure the answer you gave is incorrect
If that part of the economy was weakening (eg business capital goods) would the reading in the LEI be negative? or would it just be lower than the previous one.
Ps: thank you janakisri for your response!