The Conference Board CEI for the U.S. was unchanged in August, and July’s flat reading was revised to a small increase due to an upward revision in industrial production. Between February and August 2009, the index fell 2.0 percent (about a -3.9 percent annual rate), slower than the decline of 3.8 percent (a -7.4 percent annual rate) for the previous six months. In August, the lagging economic index for the U.S. continued to decrease, and with the coincident economic index remaining unchanged, the coincident-to-lagging ratio increased again. Meanwhile, real GDP fell at a 1.0 percent annual rate in the second quarter, following a contraction of 6.4 percent annual rate for the first quarter of the year.
After having fallen steadily since reaching a peak in July 2007, The Conference Board LEI for the U.S. has risen in the last five months, and its six-month growth rate has continued to accelerate. Meanwhile, the downtrend in The Conference Board CEI for the U.S. appears to have halted, with the index flat so far this quarter. All in all, the behavior of the composite indexes suggests that the recession is bottoming out and that economic activity will likely recover soon.
LEADING INDICATORS
Five of the ten indicators that make up The Conference Board LEI for the U.S. increased in August. The positive contributors - beginning with the largest positive contributor - were index of supplier deliveries (vendor performance), the interest rate spread, stock prices, building permits, and the index of consumer expectations. The negative contributors – beginning with the largest negative contributor – were real money supply, average weekly initial claims for unemployment insurance (inverted), and manufacturers’ new orders for nondefense capital goods.Average weekly manufacturing hours and manufacturers’ new orders for consumer goods and materials held steady in August.
The Conference Board LEI for the U.S. now stands at 102.5 (2004=100). Based on revised data, this index increased 0.9 percent in July and increased 0.8 percent in June. During the six-month span through August, the leading economic index increased 4.4 percent, with eight out of ten components advancing (diffusion index, six-month span equals 80 percent).
COINCIDENT INDICATORS
Three of the four indicators that make up The Conference Board CEI for the U.S. increased in August. The positive contributors to the index – beginning with the largest positive contributor – were industrial production, personal income less transfer payments and manufacturing and trade sales. The negative contributor was employees on nonagricultural payrolls.
The Conference Board CEI for the U.S. now stands at 99.8 (2004=100). This index increased 0.1 percent in July and decreased 0.4 percent in June. During the six-month period through August, the coincident economic index decreased 2.0 percent, with none of the four components advancing (diffusion index, six-month span equals 0.0 percent).
LAGGING INDICATORS
The Conference Board LAG for the U.S. stands at 110.2 (2004=100) in August, with three of the seven components advancing. The positive contributors to the index - beginning with the largest positive contributor – were change in labor cost per unit of output, change in CPI for services, and average duration of unemployment (inverted). The negative contributors – beginning with the largest negative contributor – were commercial and industrial loans outstanding, ratio of consumer installment credit to personal income, and ratio of manufacturing and trade inventories to sales. The average prime rate charged by banks held steady in August. Based on revised data, the lagging economic index decreased 0.5 percent in July and decreased 0.9 percent in June.
