Leading economic indicators head lower; Construction backlogs ease; Record Halloween spending expected

Weak manufacturing orders and sagging consumer sentiment were among factors dragging down a Conference Board index of leading U.S. economic indicators. The research group said its August tracking put the index at 98.4, down about a half percentage point from the prior month.

The index tracks several metrics, using 2016 as a base of 100. Numbers below 100 generally indicate the economy is in contraction mode. The August reading marked the steepest monthly drop since April.

“Besides persistently weak manufacturing new orders and consumer expectation indicators, labor market developments also weighed on the index with an increase in unemployment claims and a decline in average weekly hours in manufacturing,” Justyna Zabinska-La Monica, the Conference Board’s senior manager of business indicators, said in a statement.

The latest Conference Board report was compiled before the Federal Reserve’s recent move to cut interest rates by a quarter-percent. Other analysts have pointed to similar challenges for the U.S. economy, including slowed hiring and potential inflationary effects of trade tariffs. 

Construction project backlogs soared in the early months of the pandemic as supply chains faltered and workers became unavailable. Costs remain elevated by historical standards, but backlogs are now generally easing, according to the Associated Builders and Contractors.

The trade group’s latest backlog index showed the average timeline for contracted projects not yet completed or billed at 8.5 months in August, down slightly from 8.8 months in July. Based on a survey of member contractors taken between Aug. 20 and Sept. 3, the backlog has grown by 0.3 months since August 2024, a slower annual growth compared with the early pandemic era.

Still, the backlog has risen each of the past three months for the largest U.S. contractors, those with annual revenue above $30 million, and the backlog for those companies has reached its highest level in two years, topping 11 months. The average for smaller firms is around seven months.

“The dip in backlog observed in August is not surprising given ongoing declines in nonresidential construction spending,” Anirban Basu, the trade group’s chief economist, said in a statement. Amid rising material costs, federal policy uncertainty and re-emerging labor shortages, project assignment and completion rates in heavy manufacturing and other commercial categories could remain weak for the next few quarters, Basu said. 

Otherwise cautious consumers won’t be holding back on this year’s Halloween splurging, with U.S. spending expected to reach a record $13.1 billion, according to the National Retail Federation.

Based on its annual consumer survey conducted by consulting firm Prosper Insights & Analytics, the trade group said that figure would beat last year’s $11.6 billion in actual spending for the holiday and also top the prior record of $12.2 billion set in 2023.

Most respondents, 79%, expect prices will be higher this year specifically because of import tariffs. Discount stores remain the top preferred Halloween shopping destination at 42%, followed by seasonal specialty stores at 31%. Candy is projected to be the top category for overall U.S. spending this year at $3.9 billion.