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Economy in Brief

U.S. Leading Economic Indicators Strengthen
by Tom Moeller  June 22, 2017

The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% (3.5% y/y) during May following a 0.2% April gain, revised from 0.3%. A 0.3% rise had been expected in the Action Economics Forecast Survey. Three-month growth eased to 3.5% (AR) from its peak of 5.9% in February.

Most of the component series contributed to the index rise. A steeper interest rate yield curve, a higher ISM new orders index and improved consumer expectations for business/economic conditions had the largest positive effects. The leading credit index and stock prices increased, while consumer goods and nondefense capital goods bookings also gained. Building permits fell for the second straight month.

The Index of Coincident Economic Indicators ticked 0.1% higher during May after an unrevised 0.3% April gain. The latest rise left the three-month growth rate at 2.1% (AR), up from 1.5% during Q1. Payroll employment, real personal income less transfers and manufacturing & trade sales contributed positively to the index. Industrial production held steady following an April jump.

The Index of Lagging Economic Indicators also nudged 0.1% higher following a 0.3% rise. Three-month growth of 2.3% was down from a 3.7% gain in 2015. More C&I loans and a higher consumer installment credit/personal income ratio were offset last month by slower growth in the services CPI and the average duration of unemployment.

The ratio of coincident-to-lagging indicators also is a leading indicator of economic activity. It measures excesses in the economy relative to its ongoing performance. This ratio held steady and has been moving sideways since early last year.

The Conference Board figures are available in Haver's BCI database; the components are available there, and most are also in USECON. The expectations are in the AS1REPNA database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators (%) May Apr Mar May Y/Y 2016 2015 2014
Leading 0.3 0.2 0.4 3.5 1.2 4.4 5.6
Coincident 0.1 0.3 0.1 2.1 1.6 2.3 2.5
Lagging 0.1 0.3 0.2 2.1 3.4 3.7 3.6
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