spread and real money supply. With this month’s decline, the six-month change in the leading economic index has slowed to 2.6 percent (a 5.3 percent annual rate) for the first half of the year, down from 5.6 percent (an 11.6 percent annual rate) for the second half of 2009. However, the strengths among the leading indicators have remained widespread in recent months.
The Conference Board CEI for the U.S., a measure of current economic activity, was unchanged in June. Employment made a negative contribution to the index for the first time this year. The
six-month change in the coincident economic index stands at 1.4 percent (a 2.8 percent annual rate) through June 2010, up from 0.7 percent (a 1.4 percent annual rate) in the second half of 2009. In June, the lagging economic index increased slightly, and with the CEI unchanged, the coincident-to-lagging ratio decreased. Meanwhile, real GDP expanded at a 2.7 percent annual rate in the first quarter of 2010, following an increase of 5.6 percent annual rate in the fourth quarter of last year.
After rising sharply from March 2009 to March 2010, The Conference Board LEI for the U.S. is about 4.5 percent above its previous peak before the recession began, although it decreased in two of the last three months. As a result, its six-month growth has fallen to the slowest rate in a year. The Conference Board CEI for the U.S. was unchanged this month, after improving since November 2009. Taken together, the current behavior of the composite indexes suggests that
economic activity should continue to expand, but at a slower pace in the near term.
LEADING INDICATORS
Five of the ten indicators that make up The Conference Board LEI for the U.S. increased in June. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, real money supply, building permits, the index of consumer expectations, and manufacturers’ new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were average weekly manufacturing hours, the index of supplier deliveries (vendor performance), stock prices, and average weekly initial claims for unemployment insurance (inverted). The manufacturers’ new orders for nondefense capital goods held steady in June.
The Conference Board LEI for the U.S. now stands at 109.8 (2004=100). Based on revised data, this index increased 0.5 percent in May and decreased 0.1 percent in April. During the six-month span
through June, the leading economic index increased 2.6 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 June. The positive contributors to the index – beginning with the largest positive contributor – were personal income less transfer payments, industrial production and manufacturing and trade sales. The negative contributor was employees on nonagricultural payrolls.
The Conference Board CEI for the U.S. now stands at 101.4 (2004=100). This index increased 0.5 percent in May and increased 0.3 percent in April. During the six-month period through June, the coincident economic index increased 1.4 percent, with all four components advancing (diffusion index, six-month span equals 100.0 percent).
LAGGING INDICATORS
The Conference Board LAG for the U.S. stands at 107.6 (2004=100)in June, with two of the seven components advancing. The positive contributors to the index – beginning with the larger positive contributor – were commercial and industrial loans outstanding and change in labor cost per unit of output. The negative contributors – beginning with the larger negative contributor – were average duration of unemployment (inverted) and the ratio of consumer installment credit to personal income. The ratio of manufacturing and trade inventories to sales, average prime rate charged by banks, and change in CPI for services held steady in June. Based on revised data, the lagging economic index decreased 0.1 percent in May and decreased 0.3 percent in April.
