The Conference Board CEI for the U.S., a measure of current economic activity, increased as well in July, led by gains in industrial production and employment. The index rose 0.8 percent (about a 1.6 percent annual rate) between January and July 2011, below the growth of 1.2 percent (about a 2.4 percent annual rate) for the previous six months. However, the strengths among the coincident indicators have been widespread in recent months. The lagging economic index increased slower than the CEI in July, and as a result the coincident-to-lagging ratio increased slightly. Meanwhile, real GDP expanded at a 1.3 percent annual rate in the second quarter of 2011, after increasing 0.3 percent annual rate in the first quarter.
The Conference Board LEI for the U.S. continued to increase in July. Most of this improvement has been due to financial components, especially real money supply and interest rate spread, while the nonfinancial components have remained weak in the last three months. Meanwhile, The Conference Board CEI for the U.S. posted its largest gain in four months in July, though its six-month growth rate has continued to moderate. Taken together, despite rising risks to the expansion, the current behavior of the composite indexes and their components suggest that economic activity will continue to increase at a modest pace in the near term.
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 real money supply, the interest rate spread, average weekly initial claims for unemployment insurance (inverted), stock prices, manufacturers’ new orders for nondefense capital goods, and manufacturers’ new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were the index of supplier deliveries (vendor performance), the index of consumer expectations, and building permits. Average weekly manufacturing hours held steady in July.
The Conference Board LEI for the U.S. now stands at 115.8 (2004=100). Based on revised data, this index increased 0.3 percent in June and increased 0.7 percent in May. During the six-month span through July, the leading economic index increased 2.9 percent, with seven out of ten components advancing (diffusion index, six-month span equals 70.0 percent).
COINCIDENT INDICATORS
All 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, 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 103.3 (2004=100). Based on revised data, this index increased 0.1 percent in June and increased 0.1 percent in May. During the six-month period through July, the coincident economic index increased 0.8 percent, with three out of four components advancing (diffusion index, six-month span equals 75.0 percent).
LAGGING INDICATORS
The Conference Board LAG for the U.S. stands at 110.0 (2004=100) in July, with two of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were commercial and industrial loans outstanding and the ratio of consumer installment credit to personal income. The negative contributors – beginning with the largest negative contributor – were the average duration of unemployment (inverted) and the change in labor cost per unit of output. The ratio of manufacturing and trade inventories to sales, the average prime rate charged by banks, and the change in CPI for services held steady in July. Based on revised data, the lagging economic index increased 0.4 percent in June and increased 0.4 percent in May.
