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 »

LII Value 101.2
Change from Previous Month 0.1%
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Index for July 2014

The Leading Index for Indiana (LII), after slipping on last winter’s ice earlier this year, has begun a somewhat convincing recovery, rising to 101.2 from a revised June reading of 101.1.

View data | Downloadable 13-month graph

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

Thanks to the greater than expected increase in home builder sentiment and the exuberant stock market, the index rose despite the small dip in the manufacturing index.

There has been continuing encouraging economic news on the employment front, and this may help to explain the boost in the home builders’ optimism that surpassed expectations of many analysts and market watchers. As people feel more certain about their job prospects—either getting a better one or keeping the one they have—they are more comfortable with making large financial commitments like buying a house.

It should be noted that home builders’ sentiment is a forward-looking measure. Looking at home construction over one’s shoulder presents a different picture. Building permits for privately owned housing units in June were 4.2 percent below May’s revised rate. Housing starts in June were 9.3 percent below the May revised rate. Many economists projected that permits and starts would climb by around 2 percent.

Auto sales are a continuing bright spot. There were 1.4 million light-vehicle sales in June 2014. While only up 1.1 percent from June 2013, the year-to-date auto sales totaled 8.1 million, up 4.2 percent from a year ago. The seasonally adjusted annual rate (SAAR) in June was 16.9 million units. The last time the SAAR for a month reached 16.9 million was August 2005! That said, incentive levels by both manufacturers and dealers totaled nearly $4,000 per unit or 8.7 percent of average MSRP, according to CNW Research.

One might say that the economy is stuck in a non-recession, which is not to be confused with a recovery. Say what? The June reading for the Thomson Reuters/University of Michigan Consumer Sentiment for June came in at 82.5, a smidge above May’s final read of 81.9. Relative to its 40-year track record, the consumer sentiment index is still materially below the index average of 85. The non-recessionary average is 87.4, making June’s reading some 5 points below the non-recession average. So one might even say that we are stuck below a non-recession.

Ever the wet blanket, the National Federation of Independent Business small business optimism index, after rising for three consecutive months, took a dip. This points to expected anemic growth in the second half of the year. On the positive side, the labor components of the index were higher; the remaining eight measures—expected sales and plans to make capital expenditures, for example—were either flat or negative.

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

More Indicators to Watch
LII Release Schedule
  • Aug 2014: 8/22/2014
  • Sep 2014: 9/22/2014
  • Oct 2014: 10/21/2014
  • Nov 2014: 11/21/2014
  • Dec 2014: 12/18/2014