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Economy in Brief

U.S. Leading Indicators Continue to Increase in July
by Tom Moeller  August 19, 2021

• Financial readings and new orders lead latest gain.

• Coincident indicators rise ahead of Delta variant effects.

• Lagging indicators strengthen.

The Conference Board's Composite Index of Leading Economic Indicators increased 0.9% (10.6% y/y) during July following a 0.5% June rise, revised from 0.7%. The 1.2% May increase was unrevised. A 0.8% rise in the July 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.

The stronger increase in the leading index occurred as the leading credit index, the spread between short and long term interest rates and stock prices contributed more to the index rise. The length of the factory workweek, building permits, fewer initial jobless insurance claims and higher factory sector orders also added modestly to the rise. None of the ten component series contributed negatively to the index change.

The Index of Coincident Economic Indicators increased 0.6% in July (4.8% y/y) following an unrevised 0.4% June gain. The index rose 0.1% in May. Each of the four component series contributed positively to the July rise, as they did in June, including industrial production, nonfarm payrolls, personal income as well as manufacturing & trade sales.

The Index of Lagging Indicators rose 0.6% last month (-1.3% y/y) after no change in June. The average  duration of unemployment and the change in the services CPI had the greatest positive effects on the index change in July.

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.

The minutes to the latest FOMC meeting can be found here.

Business Cycle Indicators (%) Jul Jun May Jul Y/Y 2020 2019 2018
Leading 0.9 0.5 1.2 10.6 -4.9 1.6 5.6
Coincident 0.6 0.4 0.1 4.8 -4.3 1.6 2.4
Lagging 0.6 0.0 0.8 -1.3 1.0 2.8 2.5
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