this month, more than offsetting the negative contributions from initial unemployment claims (inverted) and supplier deliveries. The six-month change in the index has slowed to 2.0 percent (about a 4.1 percent annual rate) for the period through August 2010, down from 4.8 percent (about a 9.7 percent annual) for the previous six months. In addition, the weaknesses among the leading indicators have become slightly more widespread than the strengths over the past six months.
The Conference Board CEI for the U.S., a measure of current economic activity, was unchanged in August. The index was revised slightly lower in recent months as a result of downward data revisions to its underlying components. The six-month change in the coincident economic index stands at 1.1 percent (a 2.2 percent annual rate) through August 2010, up from 0.7 percent (a 1.4 percent annual rate) for the previous six months. In August, the lagging economic index increased slightly, and with the CEI remaining unchanged, the coincident-to-lagging ratio continued to decrease, as a result. Meanwhile, real GDP grew at a 1.6 percent annual rate in the second quarter of 2010, following an increase of 3.7 percent annual rate in the first quarter.
The Conference Board LEI for the U.S. remains on a general upward trend, although its growth has slowed substantially in recent months. Its six-month growth rate is at its slowest pace since the middle of 2009, with the weaknesses among its components having become more widespread than the strengths over the past six months. Meanwhile, The Conference Board CEI for the U.S. has been essentially flat since May this year, after having risen moderately from its most recent trough in June 2009. Taken together, the current behavior of the composite indexes and their components still suggests that economic activity will continue to expand, but at a slower pace in the near term.
LEADING INDICATORS
Seven 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 the interest rate spread, real money supply, average weekly manufacturing hours, building permits, stock prices, index of consumer expectations, and manufacturers’ new orders for nondefense capital goods. The negative contributors – beginning with the largest negative contributor – were average weekly initial claims for unemployment insurance (inverted), the index of supplier deliveries (vendor performance), and manufacturers’ new orders for consumer goods and materials.
The Conference Board LEI for the U.S. now stands at 110.2 (2004=100). Based on revised data, this index increased 0.1 percent in July and decreased 0.2 percent in June. During the six-month span through August, the leading economic index increased 2.0 percent, with four out of ten components advancing (diffusion index, six-month span equals 40 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 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 101.3 (2004=100). This index increased 0.1 percent in July and remained unchanged in June. During the six-month period through August, the
coincident economic index increased 1.1 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 108.1 (2004=100) in August, with two of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were average duration of unemployment (inverted) and change in labor cost per unit of output. The negative contributors – beginning with the largest negative contributor – were commercial and industrial loans outstanding, the ratio of consumer installment credit to personal income and change in CPI for services. The ratio of manufacturing and trade inventories to sales, and the average prime rate charged by banks held steady in August. Based on revised data, the lagging economic index increased 0.4 percent in July and increased 0.1 percent in June.
