The Conference Board CEI for the U.S. was unchanged in July, after decreasing for the past consecutive eight months. Index levels were revised slightly lower in recent months as a result of downward revisions to personal income. Between January and July 2009, the index fell 2.7 percent (a -5.4 percent annual rate), slower than the decline of 3.5 percent (a -6.8 percent annual rate) for the previous six months. In July, the lagging economic index for the U.S. fell again, and with the coincident economic index remaining unchanged, the coincident-to-lagging ratio increased further. 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 increased sharply in the last four months, amid widespread strength among its components. As a result, the six-month growth rate in the index has accelerated to its highest rate since the middle of 2004. Meanwhile, the decline in The Conference Board CEI for the U.S. has gradually moderated in recent months. All in all, the behavior of the composite indexes suggests that the recession is bottoming out and that economic activity will likely begin to recover soon.
LEADING INDICATORS
Six of the ten indicators that make up The Conference Board LEI for the U.S. increased in July. The positive contributors – beginning with the largest positive contributor – were interest rate spread, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), stock prices, and manufacturers' new orders for nondefense capital goods. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, real money supply, and building permits. The manufacturers' new orders for consumer goods and materials held steady in July.
The Conference Board LEI for the U.S. now stands at 101.6 (2004=100). Based on revised data, this index increased 0.8 percent in June and increased 1.2 percent in May. During the six-month span through July, the leading economic index increased 3.0 percent, with eight out of ten components advancing (diffusion index, six-month span equals 85 percent).
COINCIDENT INDICATORS
Three of the four indicators that make up The Conference Board CEI for the U.S. increased in July. 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 99.7 (2004=100). This index decreased 0.4 percent in June and decreased 0.4 percent in May. During the six-month period through July, the coincident economic index decreased 2.7 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 110.8 (2004=100) in July, with one of the seven components advancing. The positive contributor to the index was the ratio of consumer installment credit to personal income. The negative contributors – beginning with the largest negative contributor – were commercial and industrial loans outstanding, average duration of unemployment (inverted), change in labor cost per unit of output, change in CPI for services and the ratio of manufacturing and trade inventories to sales. The average prime rate charged by banks held steady in July. Based on revised data, the lagging economic index decreased 0.7 percent in June and decreased 0.6 percent in May.
