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Economy in Brief

U.S. Leading Economic Indicators Remain Unchanged
by Tom Moeller  June 20, 2019

The Conference Board's Composite Index of Leading Economic Indicators held steady (2.5% y/y) during May following a 0.1% April rise, revised from 0.2%. The March increase also was lessened to 0.2% from 0.3%. 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 unchanged level of the Leading Indicators series reflected lower readings for initial unemployment insurance claims, the ISM new orders index, and stock prices. The indexes measuring consumer expectations for business/economic conditions, building permits, nondefense capital goods orders and consumer goods orders each rose. Holding steady were the average workweek and the reading of a steeper yield spread between 10-year Treasuries and Fed Funds series.

Three-month growth in the leading index declined to 1.1% (AR), down from the high of 9.1% in December 2017.

The Index of Coincident Economic Indicators rose 0.2% (1.9% y/y) after two months of 0.1% increase. Each of the component series contributed positively to the index change, including the change in personal income less transfer payments, nonagricultural payroll employment, manufacturing & trade sales and industrial production.

Three-month growth in the coincident index of 1.5% (AR) was below 3.1% in December 2018.

The Index of Lagging Economic Indicators declined 0.2% last month (+2.0% y/y) after edging 0.1% lower in April. The average duration of unemployment, commercial & industrial loans outstanding, growth in unit labor costs, the services CPI and the business sector I/S ratio contributed negatively to the index change. The ratio of consumer credit outstanding-to-personal income contributed positively. The average prime rate charged by banks was unchanged for the fourth straight month.

Three-month growth in the lagging index fell sharply to -0.4% (AR) from +5.4% at yearend.

The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It increased to the highest level since December.

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 2018 2017 2016
Leading 0.0 0.1 0.2 2.5 5.7 4.0 1.0
Coincident 0.2 0.1 0.1 1.9 2.2 2.0 1.1
Lagging -0.2 -0.1 0.2 2.0 2.4 2.5 3.0
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