U.S. Leading Economic Index Falls Further in June
by:Tom Moeller
|in:Economy in Brief
Summary
- Leading index has been declining since January 2022.
- Coincident Indicator Index continues to rise.
- Lagging Economic Index edges higher.
The U.S. Leading Economic Index fell 0.2% in June (-4.8% y/y) after a 0.4% May decline, revised from -0.5% according to a report released today by the Conference Board. A 0.3% decline had been expected in the Action Economics Forecast Survey. The June index of 101.1 was the lowest level since April 2020 and off its December 2021 high of 118.6.
Four of ten indicators made negative contributions to the overall index in June including initial unemployment insurance claims, the ISM new orders index, the inverted interest rate yield curve and consumer expectations for business/economic conditions. Six of the index’s components made positive contributions including the length of the manufacturing sector workweek, factory orders for consumer goods, nondefense capital goods orders, building permits, the S&P 500 stock price index, and the leading credit index.
The 0.3% increase (1.9% y/y) in the Coincident Economic Index in June followed a 0.4% increase. All four components made positive contributions in June, led by personal income less transfers, followed by industrial production, nonagricultural payroll employment and real manufacturing & trade sales.
The Lagging Economic Index edged 0.1% higher (1.5% y/y) last month after declining 0.2% in May. Three of the index’s seven components made positive contributions, led by the average duration of unemployment, the business inventory/sales ratio and the ratio of consumer credit to personal income. The change in the services CPI made a negative contribution. Three of the seven components made little or no contribution to the index change including the six-month change in unit labor costs, banks’ prime rate and C&I loans outstanding.
The ratio of the coincident index to the lagging index is also viewed as a leading indicator. This measure edged 0.1% higher in June after a 0.6% gain during May. It previously had been on a downward trend.
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 website for coverage of leading indicator series from around the world.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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