The Conference Board CEI for the U.S., a measure of current economic activity, continued to increase in May, with all of its components rising. The six-month change in the coincident economic index stands at 1.4 percent (a 2.8 percent annual rate) through May 2010, up from 0.2 percent (a 0.4 percent annual rate) for the previous six months. In May, the lagging economic index decreased slightly, and with the CEI rising, the coincident-to-lagging ratio increased. Meanwhile, real GDP expanded at a 3.0 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.
The Conference Board LEI for the U.S. has been on an uptrend for more than a year now, amid widespread strength among its components. However, its six-month growth rate has continued to moderate. Meanwhile, The Conference Board CEI for the U.S. has been improving since November 2009, and its growth rate has picked up recently. Taken together, the current behavior of the composite indexes suggests that the economy will continue to recover, but the recent rapid expansion is not likely to be sustained in the near term.
LEADING INDICATORS
Five of the ten indicators that make up The Conference Board LEI for the U.S. increased in May. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, real money supply, average weekly manufacturing hours, the index of consumer expectations, and manufacturers' new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were stock prices, building permits, manufacturers' new orders for nondefense capital goods, the index of supplier deliveries (vendor performance), and average weekly initial claims for unemployment insurance (inverted).
The Conference Board LEI for the U.S. now stands at 109.9 (2004=100). Based on revised data, this index remained unchanged in April and increased 1.4 percent in March. During the six-month span through May, the leading economic index increased 3.9 percent, with eight out of ten components advancing (diffusion index, six-month span equals 80 percent).
COINCIDENT INDICATORS
All four indicators that make up The Conference Board CEI for the U.S. increased in May. The positive contributors to the index – beginning with the largest positive contributor – were industrial production, employees on nonagricultural payrolls, personal income less transfer payments and manufacturing and trade sales.
The Conference Board CEI for the U.S. now stands at 101.3 (2004=100). This index increased 0.4 percent in April and increased 0.3 percent in March. During the six-month period through May, 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 107.8 (2004=100) in May, with two of the seven components advancing. The positive contributors to the index were change in labor cost per unit of output and change in CPI for services. The negative contributors – beginning with the largest negative contributor – were the average duration of unemployment (inverted), commercial and industrial loans outstanding, and the ratio of consumer installment credit to personal income. The ratio of manufacturing and trade inventories to sales and average prime rate charged by banks held steady in May. Based on revised data, the lagging economic index remained unchanged in April and decreased 0.2 percent in March.
