The Conference Board CEI for the U.S., a measure of current economic activity, also increased in July. Index levels for the past two months were revised slightly lower as a result of downward data revisions to the underlying components. The six-month change in the coincident economic index stands at 1.3 percent (a 2.6 percent annual rate) through July 2010, up from 0.6 percent (a 1.2 percent annual rate) for the previous six months. In July, the lagging economic index increased more than the CEI, and the coincident-to-lagging ratio decreased for the second consecutive month, as a result. Meanwhile, real GDP expanded at a 2.4 percent annual rate in the second quarter of 2010, following an increase of 3.7 percent annual rate in the first quarter.
After rising sharply from March 2009 to March 2010, The Conference Board LEI for the U.S. was essentially flat in the second quarter. In addition, its six-month growth rate is at its slowest pace since the middle of 2009, with the strengths among its components becoming less widespread in recent months. Meanwhile, The Conference Board CEI for the U.S. remains on a rising trend that began in late 2009. Taken together, the current behavior of the composite indexes and their components 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 July. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, average weekly manufacturing hours, the index of supplier deliveries (vendor performance), average weekly initial claims for unemployment insurance (inverted), and manufacturers’ new orders for nondefense capital goods. The negative contributors – beginning with the largest negative contributor – were the index of consumer expectations, building permits, real money supply, and stock prices. The manufacturers’ new orders for consumer goods and materials held steady in July.
The Conference Board LEI for the U.S. now stands at 109.8 (2004=100). Based on revised data, this index decreased 0.3 percent in June and increased 0.5 percent in May. During the six-month span through July, the leading economic index increased 2.0 percent, with five out of ten components advancing (diffusion index, six-month span equals 50 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 101.4 (2004=100). This index decreased 0.1 percent in June and increased 0.4 percent in May. During the six-month period through July, the coincident economic index increased 1.3 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 107.9 (2004=100)in July, with three of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were change in CPI for services, average duration of unemployment (inverted), and change in labor cost per unit of output. The negative contributor was commercial and industrial loans outstanding. The ratio of manufacturing and trade inventories to sales, average prime rate charged by banks, and ratio of consumer installment credit to personal income held steady in July. Based on revised data, the lagging economic index increased 0.1 percent
in June and decreased 0.1 percent in May.
