NEW YORK – The U.S. Leading Economic Indicators fell in June for the second month in a row, The Conference Board reported today.
The trade group’s Leading Index – a predictor of the nation’s economic performance over the next three to six months – fell 0.1 percent last month to 101.7 points (2004 = 100). The index, previously thought to have risen 0.1 percent in May (READ MORE) now is considered to have fallen 0.2 percent that month after rising 0.1 percent in April. “May’s small increase was revised down to a small decline as a result of data revisions in average work week in manufacturing and manufacturers’ new orders for consumer goods and materials,” the board said.
Analysts had expected the index to fall 0.1 percent in June from May’s original reading of 102.1 points, based on the mean prediction of 50 economists polled by Bloomberg News . (Their expectations for June ranged from a decline of 0.4 percent to an increase of 0.3 percent.)
Four of 10 leading indicators improved compared with May, led by residential building permits, which rose sharply in the Northeast (READ MORE). Also rising were the interest-rate spread; an index of vendor performance; and manufacturers’ new orders for consumer goods and materials.
Losing ground in June were the real money supply; stock prices; new claims for unemployment insurance; average weekly manufacturing hours; consumer expectations, measured by the Reuters / University of Michigan Consumer Sentiment Index (READ MORE); and manufacturers’ orders for non-defense capital goods.
The six-month decline in the Leading Index “has moderated somewhat … to -0.9 percent (a -1.7 percent annual rate) in June, up from -1.7 percent (a -3.4 percent annual rate) at the end of the first quarter,” the board noted in its report. “However, weaknesses among the leading indicators continue to be widespread.”
Meanwhile, the Lagging Index fell 0.3 percent in June to 111.5 points, after falling 0.2 percent in May and 0.1 percent in April, the board said. An increase last month in the consumer price index for services was outweighed by a decline in commercial and industrial loans outstanding; an increase in the average duration of unemployment; the change in labor costs per unit output; and the ratio of consumer installment credit to personal income. Holding ground in June were the ratio of manufacturing and trade inventories to sales; and the average prime rate charged by banks.
The Coincident Index – a measure of current economic activity – rose slightly last month for the first time since October. It rose 0.1 percent in June to 106.9 points after falling 0.1 percent in May (rather than rising 0.1 percent, as previously thought) and holding steady in April. Increases were seen last month in three of the index’ four components: industrial production; personal income less transfer payments, and manufacturing and trade sales. Non-farm payrolls – the other indicator – declined.
The coincident to lagging ratio increased for the second straight month, The Conference Board said.
“We’re in a very strange period where we’re teetering between negative and positive growth periods,” Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York, told Bloomberg News. “We may be seeing weakness in coming quarters.”
The Conference Board is a nonpartisan, nonprofit business membership and research organization with offices in New York City, Chicago and abroad. Additional information, including this month’s full Leading Economic Indicators report, is available at www.Conference-Board.org.
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