months.
The Conference Board CEI for the U.S., a measure of current economic activity, continued to increase in May. The index rose 1.2 percent (a 2.4 percent annual rate) between November 2010 and May 2011, faster than the growth of 0.6 percent (a 1.2 percent annual rate) for the previous six months. In addition, the strengths among the coincident indicators have remained very widespread, with all components advancing over the past six months. The lagging economic index continued to increase faster than the CEI, and the coincident-to-lagging ratio fell further. Meanwhile, real GDP expanded at a 1.8 percent annual rate in the first quarter of the year, slower than the growth of 3.1 percent annual rate in the fourth quarter of 2010.
The Conference Board LEI for the U.S. resumed increasing in May, after declining in April for the first time since mid-2010. However, its six-month growth rate has continued to moderate. Meanwhile, The Conference Board CEI for the U.S. has remained on an increasing trend, and its six-month growth rate has been fairly stable. Taken together, the current behavior of the composite indexes and their components suggest that economic activity will continue to expand at a modest pace in the near term.
LEADING INDICATORS
Eight 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, consumer expectations, building permits, real money supply, manufacturers’ new orders for nondefense capital goods, average weekly initial claims for unemployment insurance (inverted), stock prices, and manufacturers’ new orders for consumer goods and materials. The negative contributor was the index of supplier deliveries(vendor performance). Average weekly manufacturing hours held steady in May.
The Conference Board LEI for the U.S. now stands at 114.7 (2004=100). Based on revised data, this index decreased 0.4 percent in April and increased 0.7 percent in March. During the six-month span through May, the leading economic index increased 3.0 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 personal income less transfer payments, employees on nonagricultural payrolls, manufacturing and trade sales, and industrial production.
The Conference Board CEI for the U.S. now stands at 102.9 (2004=100). This index increased 0.1 percent in April and increased 0.2 percent in March. During the six-month period through May, the coincident economic index increased 1.2 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 109.1 (2004=100) in May, with three of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were commercial and industrial loans outstanding, change in CPI for services, and change in labor cost per unit of output. The negative contributor was the average duration of unemployment (inverted). 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 May. Based on revised data, the lagging economic index increased 0.5 percent in April and increased 0.2 percent in March.
