Global| Jul 18 2019U.S. Leading Economic Indicators Decline
by:Tom Moeller
|in:Economy in Brief
Summary
The Conference Board's Composite Index of Leading Economic Indicators fell 0.3% (+1.6% y/y) during June following unrevised stability in May. It was the first decline in six months. A 0.1% uptick had been expected in the Action [...]
The Conference Board's Composite Index of Leading Economic Indicators fell 0.3% (+1.6% y/y) during June following unrevised stability in May. It was the first decline in six months. A 0.1% uptick had been expected in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in the overall economy.
The decline in the Leading Indicators reflected lower readings for several component series. The readings for initial unemployment insurance claims, the ISM new orders index, building permits, the yield spread between 10-year Treasuries and Fed Funds fell. Offsetting these declines was improvement in the average workweek, consumer goods orders, new orders for nondefense capital goods, stock prices and consumer expectations for business & economic conditions.
Three-month growth in the leading index declined to -0.7% (AR), down from the high of 9.1% in December 2017.
The Index of Coincident Economic Indicators inched 0.1% higher (1.6% y/y) during June after a 0.2% increase. The rise reflected gains in personal income less transfer payments, nonagricultural payroll employment and manufacturing & trade sales. Industrial production fell.
Three-month growth in the coincident index improved to 1.1% (AR), but remained below 3.1% in December of last year.
The Index of Lagging Economic Indicators strengthened 0.6% last month (2.6% y/y) after edging 0.2% lower in May. The average duration of unemployment surged as well as commercial & industrial loans outstanding. The ratio of consumer credit outstanding-to-personal income also contributed positively to the lagging index. Growth in unit labor costs and the gain in the services CPI contributed negatively to the index change and the average prime rate charged by banks held steady for the fifth straight month.
Three-month growth in the lagging index rose slightly to 1.5% (AR), but remained below 5.4% at yearend 2018.
The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It declined to the lowest level since early 1975.
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.
Why Is Inflation Low Globally? from the Federal Reserve Bank of San Francisco is available here.
| Business Cycle Indicators (%) | Jun | May | Apr | June Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Leading | -0.3 | 0.0 | 0.1 | 1.6 | 5.7 | 4.0 | 1.0 |
| Coincident | 0.1 | 0.2 | 0.0 | 1.6 | 2.2 | 2.0 | 1.1 |
| Lagging | 0.6 | -0.2 | 0.0 | 2.6 | 2.4 | 2.5 | 3.0 |
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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