Leading Index for Indiana

Updated monthly, the Leading Index for Indiana™ (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 national indexes, the LII focuses on key sectors that are important to the Indiana economy. Learn more about the index »

Notice to Users: Regular production of the LII has been discontinued as of October 2014. Learn more »

LII Value 102.2
Change from Previous Month 0.1%
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Index for October 2014

The Leading Index for Indiana (LII) rose in October, but less vigorously than in the last several months

View data | Downloadable 13-month graph

Note: Hover over the lower graph and move the slider to change the time period displayed.

The LII for October read 102.2, up a mere 0.1 of a point from a revised September reading of 102.1. A couple components of the LII were in a tug of war, with the ISM manufacturing report tugging the index downward and the transportation and auto sector components unconvincingly pushing the index upward. The drop in home builder sentiment also moderated the index’s rate of ascent.

Small business optimism is still stuck in a rut, well below the pre-recession average. The National Federation of Independent Business (NFIB) small business optimism index dipped in September, giving up 0.8 points, falling to 95.3. Two important components of the index that are directly relevant to GDP growth and hiring—namely plans to increase hiring and plans to make capital investment—fell considerably. As many market analysts may wonder if Wall Street has hit its peak, small businesses are still wondering when they’ll get out of their trench.

This is the last month the LII will be released on a regular basis. To be more relevant, the LII would need to be reconfigured because the interest rate component of the LII has been undercut by Federal Reserve policy. The yield spreads that once foretold of changes in economic growth have proven to be less reliable as a result. For those interested in interest rate dynamics, please refer to a recent study by Wells Fargo Securities documenting that the relationship between the interest rate spread and GDP growth is questionable. While the interest rate spread is only one of five components of the LII, the tenuous relationship in this component would require a rethinking and reconfiguring of the design of the LII.

Leaving on a high note: Based on the Thomson Reuters/University of Michigan preliminary October index reading, consumers are not in a panic about the general weakness in the global economy, about escalating military conflicts, or even about Ebola. The overall index on consumer sentiment rose this month, to the highest reading in more than seven years. "The data show absolutely no signs that fear and panic is about to overtake the consumer sector," said the survey director.

Drivers of Change

Data Revisions

The historical series for the LII reflects regular monthly revisions in source data. Users that analyze historical trends in the LII are encouraged to update the entire data series to eliminate discontinuities in the data.

Source: Indiana Business Research Center, Indiana University Kelley School of Business

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