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What is the difference between leading factors and lagging factors ?

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Question added by Ziad Al Barazi , Global Project Manager , Compass Datacenters
Date Posted: 2016/02/13
Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

Leading factors are things that happen before (or about the same time as, or immediately after) the event that you are examining.

Lagging factors happen afterwards.

For example, if you are looking at the housing market, sale prices are a lagging indicator - you don't know the sale prices until the house has been sold:  the data then has to be collected, collated and published.  In other words, house price data tells you what happened last month or last quarter.

A leading indicator would be mortgage approvals.  Mortgage approvals themselves are a lagging indicator for mortgage approvals, but they are a leading indicator for house prices because the mortgage is approved before the house is bought, and in some markets the approvals are "in principle" before the particular house in question is even identified.   In other words last month's mortgage approvals tell you what;s likely to happen to this month's house prices.

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