The NCSU Index of North Carolina’s leading economic indicators (the “Index”), a forecast of the state economy’s direction four to six months ahead, rose a strong 1.4% in October from its level in September to an all time high. Each component of the Index improved, led by a double-digit. Unemployment claims, however also rose 300% over a year ago.
North Carolina State University economist Mike Walden, who composes the Index, said that two cautions need to be kept in mind with this latest reading on the Index. First, although the Index is now at a record high, this doesn’t imply the North Carolina economy has returned to pre-pandemic levels. Instead, it suggests the outlook for future economic growth is very positive.
Second, the Index is designed to provide a forecast for the direction of the state economy several months ahead. In the interim, economic growth could stall. Indeed, there is a likelihood of a near-term pause in economic growth with the renewed surge in Covid-19 cases.
The Index is composed of five components: the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index, North Carolina initial claims for unemployment benefits, North Carolina building permits, average weekly hours of work of all North Carolina employees in manufacturing, and average weekly earnings of all North Carolina employees in manufacturing.