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Economy in Brief

U.S. Leading Economic Indicators Rebound
by Tom Moeller  July 21, 2016

The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% during June (0.7% y/y), following an unrevised 0.2% May decline. Expectations had been for a 0.2% rise in the Action Economics Forecast Survey. The three-month change in the index improved to 2.3% (AR), but was still below its peak growth of 7.1% roughly one year ago. Lower initial claims for unemployment insurance had the largest positive impact on the total index followed by a steeper interest rate yield curve. The leading credit index also increased and most other components posted modest gains. A shorter average workweek provided the only negative influence on the total.

The coincident index increased 0.3% (1.8% y/y) following an unrevised no change. Three-month growth increased to 1.8% (AR). Each of the component series, including nonfarm payrolls, industrial production, personal income less transfers and manufacturing & trade sales contributed positively to the index.

The lagging index eased 0.1% after an upwardly revised 0.4% gain. Three month growth declined sharply to 2.0%. A shorter average duration of unemployment, fewer C&I loans outstanding and lessened growth in unit labor costs had the largest negative effects on the index. These were offset by faster growth in the services CPI, a higher consumer credit-to-income ratio and a higher inventory-to-sales ratio.

The ratio of coincident-to-lagging indicators also is a leading indicator of economic activity. It measures excesses in the economy relative to its ongoing performance. This ratio rose and reversed the prior month's decline, which was to the lowest level since 1961.

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 (%) Jun May Apr Jun Y/Y 2015 2014 2013
Leading 0.3 -0.2 0.5 0.7 4.3 5.8 2.9
Coincident 0.3 0.0 0.2 1.8 2.5 2.6 1.4
Lagging -0.1 0.4 0.2 3.4 3.7 3.7 3.9
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