NEW YORK – Leading indicators for the U.S. economy faltered in August for the third month in a row, but not so badly as in July, The Conference Board reported today.
But last month’s reading was “propped up by gains in the stock market that have since evaporated, after the failure of Lehman Brothers Holdings Inc. and takeover of American International Group Inc. (READ MORE),” Bloomberg News reported today.
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The trade group’s Leading Index – a predictor of the nation’s economic performance over the next three to six months – fell 0.5 percent last month to 100.8 points (2004 = 100). It had fallen 0.7 percent in July (READ MORE) and 0.1 percent in June.
Analysts had expected the index to fall 0.2 percent in August, based on the median forecast from a Bloomberg survey of 57 economists.
Six of the index’s 10 leading indicators fell last month, led by supplier deliveries / vendor performance, the board said. Also losing ground were building permits; average weekly initial claims for unemployment insurance, which rose in August; average weekly manufacturing hours; manufacturers’ new orders for nondefense capital goods; and the real money supply.
Improvements were seen in the other four leading indicators, led by the interest-rate spread. Also rising last month were consumer expectations, as measured by the Reuters / University of Michigan Consumer Sentiment Index; stock prices; and manufacturers’ new orders for consumer goods and materials.
Over the past six months, the Leading Index has fallen 1.1 percent, with only two indicators advancing, for an annual rate of decline of 2.1 percent, the group said. That represented a slight improvement from the index’s 3.3-percent annual rate of decline in the previous half year, weaknesses among the indicators have remained widespread. Weaknesses among the indicators, however, have remained widespread.
“The economy right now is so slow that it doesn’t have much cushion for shocks,” Conference Board economist Ken Goldstein said in a statement today. “We may not see any signs of improvement until well into the second half of 2009.”
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.
