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Released: Thursday, May 21, 2009

The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 1.0 percent, The Conference Board Coincident Economic Index™ (CEI) decreased 0.2 percent and The Conference Board Lagging Economic Index™ (LAG) decreased 0.5 percent in April.

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  • The Conference Board LEI for the U.S. rose sharply in April, the first increase in seven months, and the strengths among its components exceeded the weaknesses for the first time in one and a half years. Stock prices, the interest rate spread, consumer expectations, initial unemployment claims, the average workweek, and supplier deliveries all contributed positively to the index this month, more than offsetting the negative contributions from real money supply and building permits. The six-month change in the index has risen to -0.6 percent (a -1.2 percent annual rate) in the period through April 2009, up from -2.4 percent (a -4.8 percent annual rate) from April to October 2008. However, the weaknesses among the components have remained widespread over the past six-month period.
  • The Conference Board CEI for the U.S. fell again in April, driven by continued declines in employment and industrial production. The index decreased 3.5 percent (about a -6.9 percent annual rate) between October 2008 and April 2009, faster than the decline of 1.8 percent (a -3.5 percent annual rate) for the previous six months. In April, the lagging economic index for the U.S. fell more than the coincident economic index, and the coincident-to-lagging ratio rose, as a result. Meanwhile, real GDP contracted at a 6.1 percent annual rate in the first quarter of 2009, following a decline of 6.3 percent annual rate in the fourth quarter of 2008.
  • The Conference Board LEI for the U.S. has been generally falling since the middle of 2007, but the pace of its decline has slowed substantially in recent months. With this month's sharp and widespread increase, the six-month decline in the index is at its slowest since the fourth quarter of 2007. Meanwhile, The Conference Board CEI for the U.S. continues to be on a downward trend that began in late 2007, and its decrease in recent months remains sharp. Taken together, the behavior of the composite economic indexes suggests that the contraction in economic activity will continue in the near term, but will likely become less severe in upcoming months.

LEADING INDICATORS. Seven 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 stock prices, interest rate spread, the index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors — beginning with the largest negative contributor — were real money supply*, building permits, and manufacturers' new orders for nondefense capital goods*.

The Conference Board LEI for the U.S. now stands at 99.0 (2004=100). Based on revised data, this index decreased 0.2 percent in March and decreased 0.5 percent in February. During the six-month span through April, the leading economic index decreased 0.6 percent, with three out of ten components advancing (diffusion index, six-month span equals 30 percent).

COINCIDENT INDICATORS. Two of the 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 personal income less transfer payments* and manufacturing and trade sales*. The negative contributors — beginning with the largest negative contributor — were employees on nonagricultural payrolls and industrial production.

The Conference Board CEI for the U.S. now stands at 101.1 (2004=100). This index decreased 0.6 percent in March and decreased 0.6 percent in February. During the six-month period through April, the coincident economic index decreased 3.5 percent, with one out of four components advancing (diffusion index, six-month span equals 25 percent).

LAGGING INDICATORS. The Conference Board LAG for the U.S. stands at 112.5 (2004=100) in April, with one of the seven components advancing. The positive contributor to the index was the ratio of consumer installment credit to personal income*. The negative contributors — beginning with the largest negative contributor — were commercial and industrial loans outstanding*, average duration of unemployment (inverted), change in labor cost per unit of output*, change in CPI for services, and ratio of manufacturing and trade inventories to sales*. The average prime rate charged by banks* held steady in April. Based on revised data, the lagging economic index decreased 0.5 percent in March and decreased 0.6 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. and reported in the tables in this release are those available "as of" 12 Noon on May 19, 2009. 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.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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