The U.S. economy showed strong growth in September, although signs suggest the pace of its upward track may be slowing. The Conference Board Leading Economic Index (LEI) increased 0.5 percent in September to 111.8. This follows a 0.4 percent increase in August and a 0.7 percent increase in July.

“The US LEI improved further in September, suggesting the U.S. business cycle remains on a strong growth trajectory heading into 2019. However, the LEI’s growth has slowed somewhat in recent months, suggesting the economy may be facing capacity constraints and increasingly tight labor markets,” says Ataman Ozyildirim, director and global research chair at The Conference Board. “Economic growth could exceed 3.5 percent in the second half of 2018, but, unless the momentum in housing, orders and stock prices accelerates, that pace is unlikely to be sustained in 2019.”

The Conference Board’s Coincident Economic Index (CEI), a measure of current economic activity, also increased in September, rising 0.1 percent to 104.4, following a 0.3 percent increase in August and a 0.1 percent increase in July. Its Lagging Economic Index, an indicator representing changes that come only after the economy has begun to follow a particular trend, slipped 0.1 percent in September to 105.3, after an increase of 0.2 percent in August and a 0.2 percent decline in July.

The Conference Board’s indexes are composites of leading, coincident and lagging economic indicators designed to highlight peaks and troughs in the business cycle that could be obscured by volatility within individual components. The LEI is comprised of 10 indicators. These include average weekly hours, manufacturing; average weekly initial claims for unemployment insurance; manufacturers’ new orders, consumer goods and materials; the Institute of Supply Management Index of New Orders; manufacturers’ new orders, nondefense capital goods excluding aircraft orders; building permits, new private housing units; stock prices, 500 common stocks; the Leading Credit Index; the interest rate spread, 10-year Treasury bonds less federal funds; and average consumer expectations for business conditions.