BLOOMINGTON, Ind. -- The Leading Index for Indiana was unchanged in April from its revised reading of 101.1 a month earlier, suggesting ambivalence about the state's economy.
The gains in the index components for manufacturing and transportation were not sufficient to move the index upward given that the other components were slightly lower or essentially unmoved.
"While the National Federation of Independent Business usually plays the role of Eeyore, no matter what direction the LII moves, their Index of Small Business Confidence rose 2 percentage points last month," said Timothy Slaper, research director of the Indiana Business Research Center in Indiana University's Kelley School of Business, which produces the monthly index.
"Chief executive officers, according to the Conference Board and PwC Measure of CEO Confidence, are more positive for the short-run future. Businesses, both big and small, appear to be more upbeat."
And they may have good reason, Slaper noted. The Federal Reserve reports that industrial production increased 0.7 percent in March after having advanced 1.2 percent in February. Industrial production moved up at an annual rate of 4.4 percent this last quarter and currently stands at 103.2 percent of its pre-recession, 2007 average.
"Is the economy heating up? Will the Federal Reserve become more aggressive with the taper -- and with that, potentially stall the housing market recovery? The Fed and its new chair, Janet Yellen, have to read conflicting signals," Slaper said.
"Economic slack is disappearing based on three labor market indicators of temporary help services hiring, firms unable to fill job openings and a four-week moving average of initial unemployment claims," he added. "But then again, another measure of economic slack -- the U6 and U3 gap -- remains well above levels experienced before the recession."
The measure U3 is the standard measure of the unemployment rate -- lowered by falling labor participation rates -- and U6 is total unemployed that includes those employed part-time for economic reasons, not by choice.
The latest from the National Association of Home Builders/Wells Fargo Housing Market Index shows that builder confidence has been in a holding pattern. Builder confidence in the market for newly built, single-family homes rose one point to 47 in April from a downwardly revised March reading of 46.
Based on the Institute of Supply Management’s Purchasing Manager’s Index, economic activity in the manufacturing sector expanded in March for the 10th consecutive month. The March PMI stood at 53.7 percent, an increase of 0.5 percentage point from February's reading.
The auto component of the LII declined slightly from last month, by 0.1 percent, but there were 1.5 million light-vehicle sales in the United States in March, marking an increase of 28.8 percent from February and an increase of 5.6 percent over March 2013. The March seasonally adjusted annual rate for light-vehicle sales was 16.3 million.
The transportation and logistics component of the LII, the Dow Jones Transportation Average, bounced back by 3.0 percent in March.
As with last month, the interest rate spread was unchanged.
About the Leading Index for Indiana
The Indiana Business Research Center in the Kelley School of Business, with offices on Indiana University's Bloomington and Indianapolis campuses, produces the monthly index. The LII was developed for Hoosier businesses and governments to provide a signal for changes in the general direction of the Indiana economy. In contrast to The Conference Board's Leading Economic Index and other indexes that are national in scope, the LII uses national level data for key sectors that are important to the Indiana economy. The reason the LII uses national level data is because national data are timelier than state-level data.