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Economy in Brief

U.S. Leading Indicators Post Another Strong Gain in May
by Tom Moeller  June 17, 2021

• Component improvement in leader's index remains broad-based.

• Coincident indicators continue to firm.

• Lagging indicators' decline suggests more economic slack.

The Conference Board's Composite Index of Leading Economic Indicators strengthened 1.3% (14.7% y/y) during May, the same as in April, revised from 1.6%. The 1.4% March increase was revised from 1.3%. A 1.4% rise in the May index had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Component increases in the leading indicators index included an improved ISM new orders index, fewer initial unemployment insurance claims, higher stock prices, more consumer goods orders, a steeper interest rate yield curve, improved consumer expectations and the leading credit index. Building permits and capital goods orders fell slightly while the average workweek was unchanged.

The Index of Coincident Economic Indicators increased 0.4% (10.4% y/y) following an unrevised 0.3% April rise. The index rose 1.3% in March, revised from 0.9%. Each of the four component series contributed positively to the May gain, as they did in April, including industrial production, nonfarm payrolls, personal income and manufacturing & trade sales.

The Index of Lagging Indicators fell 2.2% (-8.5% y/y) during May after rising 3.0% in April, revised from 1.8%. That  followed a 4.2% March drop, revised from -3.7%. A lower consumer installment credit/income ratio accounted for all of the decline. A stronger services CPI was offset by minimal declines in other series.

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 2020 2019 2018
Leading 1.3 1.3 1.4 14.7 -4.9 1.6 5.6
Coincident 0.4 0.3 1.3 10.4 -4.3 1.6 2.4
Lagging -2.2 3.0 -4.2 -8.5 1.0 2.8 2.5
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