Leading Indicators

Leading indicators mean economic data that may signal where the economy is heading before changes appear broadly. In simple terms, leading indicators try to give early clues about the future economy. Leading indicators are important because investors use them to anticipate recessions, recoveries, or changes in business conditions. They may include new orders, building permits, consumer expectations, or financial market signals. For example, a sharp decline in new orders may warn that manufacturing activity could weaken later. Leading indicators are not perfect predictions. They can give false signals or change before a clear trend develops.