The Conference Board Leading Economic Index® (LEI) for the U.S. Dips

NEW YORK, May 20 /PRNewswire/ -- The Conference Board Leading Economic Index®(LEI) for the U.S. declined 0.1 percent in April, following a 1.3 percent gain in March, and a 0.4 percent rise in February.  

Says Ken Goldstein, economist at The Conference Board: "These latest results suggest a recovery that will continue through the summer, although it could lose a little steam. The U.S. LEI declined slightly for the first time in more than a year, and its six-month growth rate has moderated since December. Meanwhile, the coincident index, a measure of current economic activity, has been improving since mid-2009."

The Conference Board Coincident Economic Index® (CEI) for the U.S. rose 0.3 percent in April, following a 0.1 percent increase in March, and a 0.1 percent increase in February. The Conference Board Lagging Economic Index™ (LAG) increased 0.1 percent in April, following a 0.1 percent increase in March, and a 0.2 percent rise in February.

• The Conference Board LEI for the U.S. decreased slightly in April, its first decline since March 2009. Building permits, supplier deliveries, real money supply and weekly initial unemployment insurance claims made the largest negative contributions to the index this month, more than offsetting the positive contributions from the interest rate spread, stock prices and the average workweek. The leading economic index rose 4.4 percent (about a 9.0 percent annual rate) between October 2009 and April 2010, moderately slower than the increase of 5.5 percent (about an 11.4 percent annual rate) for the previous six months. However, the strengths among the leading indicators have remained widespread in recent months.
• The Conference Board CEI for the U.S. continued to increase in April, with all of its components contributing positively to the index. The coincident economic index increased 1.1 percent (about a 2.2 percent annual rate) between October 2009 and April 2010, a reversal from the decline of 0.5 percent (about a -1.0 percent annual rate) during the previous six months. In April, the CEI rose more than the lagging economic index, and the coincident-to-lagging ratio increased, as a result. Meanwhile, real GDP expanded at a 3.2 percent annual rate in the first quarter of 2010, following an increase of 5.6 percent annual rate in the fourth quarter of last year.
• The Conference Board LEI for the U.S. declined for the first time in more than a year this month, and its six-month growth rate has moderated somewhat from December 2009. Meanwhile, The Conference Board CEI for the U.S. has been on a slight uptrend since mid-2009, after declining sharply for the previous year and a half. Taken together, the current behavior of the composite indexes suggests that economic activity will continue to improve, but perhaps at a more modest pace in the near term.

LEADING INDICATORS

Four of the ten indicators that make up The Conference Board LEI for the U.S. increased in April.  The positive contributors – beginning with the largest positive contributor – were the interest rate spread, stock prices, average weekly manufacturing hours,  and manufacturers' new orders for nondefense capital goods*.  The negative contributors – beginning with the largest negative contributor – were building permits, index of supplier deliveries (vendor performance),  real money supply*, average weekly initial claims for unemployment insurance (inverted), the index of consumer expectations, and manufacturers' new orders for consumer goods and materials*.  

The Conference Board LEI for the U.S. now stands at 109.3 (2004=100).  Based on revised data, this index increased 1.3 percent in March and increased 0.4 percent in February.  During the six-month span through April, the leading economic index increased 4.4 percent, with eight out of ten components advancing (diffusion index, six-month span equals 80 percent).

COINCIDENT INDICATORS

All four indicators that make up The Conference Board CEI for the U.S. increased in April.  The positive contributors to the index – beginning with the largest positive contributor – were employees on nonagricultural payrolls, industrial production, personal income less transfer payments* and manufacturing and trade sales*.  

The Conference Board CEI for the U.S. now stands at 100.6 (2004=100).  This index increased 0.1 percent in March and increased 0.1 percent in February.  During the six-month period through April, the coincident economic index increased 1.1 percent, with all four components advancing (diffusion index, six-month span equals 100 percent).

LAGGING INDICATORS

The Conference Board LAG for the U.S. stands at 108.2 (2004=100) in April, with two of the seven components advancing.  The positive contributors to the index – beginning with the larger positive contributor – were commercial and industrial loans outstanding* and change in labor cost per unit of output*.  The negative contributors – beginning with the largest negative contributor – were average duration of unemployment (inverted), change in CPI for services, and ratio of consumer installment credit to personal income*.  The ratio of manufacturing and trade inventories to sales* and average prime rate charged by banks held steady in April.  Based on revised data, the lagging economic index increased 0.1 percent in March and increased 0.2 percent in February.

DATA AVAILABILITY AND NOTES

The data series used to compute The Conference Board Leading Economic Index® (LEI) for the U.S., The Conference Board Coincident Economic Index® (CEI) for the U.S. and The Conference Board Lagging Economic Index® (LAG) for the U.S. are those available "as of" 12 Noon on May 19, 2010. Some series are estimated as noted below.

* Series in The Conference Board LEI for the U.S. based on our estimates are manufacturers' new orders for consumer goods and materials, manufacturers' new orders for nondefense capital goods, and the personal consumption expenditure used to deflate the money supply. Series in The Conference Board CEI for the U.S. that are based on our estimates are personal income less transfer payments and manufacturing and trade sales. Series in The Conference Board LAG for the U.S. that are based on our estimates are inventories to sales ratio, consumer installment credit to income ratio, change in labor cost per unit of output, and the personal consumption expenditure used to deflate commercial and industrial loans outstanding.

The procedure used to estimate the current month's personal consumption expenditure deflator (used in the calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month's consumer price index when it is available before the release of The Conference Board LEI for the U.S.

Website: www.conference-board.org/economics/bci

SOURCE The Conference Board