Monday, January 3, 2011

Leading Economic Indicator

A leading economic indicator is some sort of activity level, metric or statistic, that suggests the potential level of future economic activity. Leading indicators are often used by economists and strategists to determine the course of the current economic cycle. Portfolio managers that practice sector rotation are likely to make significant use of leading indicators. Examples of leading indicators include: PMI indexes (particularly the 'new orders' sub-index), aggregate advertising spending trends, the shape of the yield curve, etc. The opposite of a leading economic indicator is a lagging economic indicator.

Synonyms: Leading indicator, Predictor

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