In announcing its Leading Economic Index (LEI) for the United States on July 20, The Conference Board reported an increase in June for the third consecutive month. The June gain of 0.7% follows a 1.3% rise in May and a 1% increase in April. According to the Board, the six month rise of 2% (a 4.1% annual rate) in the U.S. LEI is a substantial improvement over the -3.1% (-6.2% annual rate) for the previous six months.
“The recession has been losing steam since the spring, although very large job losses continue,” noted Ken Goldstein, economist at The Conference Board in a release accompanying the announcement. “Nevertheless, confidence is slowly rebuilding. Financial markets are less volatile. Even the housing market is stabilizing. If these trends continue, expect a slow recovery this autumn.”
The Conference Board Coincident Economic Index (CEI) continued to decrease in June (-0.2%), following declines of -0.3 in each of the two previous months due to further contractions in employment and industrial production. Between December 2008 and June 2009, the index fell 3% (a -5.9% annual rate), slightly faster than the decline of 2.8% (a -5.6% annual rate) for the previous six months. In June, the lagging economic index (LAG) for the U.S. fell 0.7% and the coincident-to-lagging ratio increased as a result. Meanwhile, according to The Conference Board, real GDP fell at a 5.5% annual rate in the first quarter of 2009, following a contraction of 6.3% annually in the fourth quarter of 2008.
During June seven of the 10 indicators that the Board uses to compute the LEI for the U.S. increased. They were: interest rate spread; building permits; stock prices; weekly initial claims (inverted); average weekly manufacturing hours; index of supplier deliveries; and manufacturers’ new orders for consumer goods and materials. The negative indicators were: real money supply; manufacturers’ new orders for non-defense capital goods, and index of consumer expectations.
Two of the four indicators that make up The Conference Board CEI for the U.S. increased in June. The positive contributors to the index–beginning with the largest positive contributor–were personal income less transfer payments and manufacturing and trade sales. The negative contributors were employees on nonagricultural payrolls and industrial production.
The Conference Board LEI for the U.S. now stands at 100.9 (2004=100) and the CEI at 100.3 (2004=100). The next scheduled release of index numbers will be on August 20.