Economics Press Release - The Conference Board Leading Economic Index™ (LEI) for the U.S. Improves Again

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The Conference Board Leading Economic Index™ (LEI) for the U.S. Improves Again

June 18, 2009

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The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 1.2 percent, The Conference Board Coincident Economic Index™ (CEI) decreased 0.2 percent and The Conference Board Lagging Economic Index™ (LAG) decreased 0.2 percent in May.

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The Conference Board LEI for the U.S. increased sharply for the second consecutive month in May. In addition, the strengths among its components continued to exceed the weaknesses this month. Vendor performance, the interest rate spread, real money supply, stock prices, consumer expectations, and building permits contributed positively to the index, more than offsetting the negative contributions from weekly hours and initial unemployment claims. The index rose 1.2 percent (a 2.4 percent annual rate) between November 2008 and May 2009, the first time the index has increased over a six-month period since July 2007, and the strengths among the leading indicators have become balanced with the weaknesses during this period.
The Conference Board CEI for the U.S. continued to decrease in May, amid further declines in industrial production and employment. The six-month change in the index stands at -3.3 percent (a -6.4 percent annual rate) in the period through May, down from -2.3 percent (a -4.5 percent annual rate) during the previous six months. In May, the lagging economic index for the U.S. fell by the same amount as the coincident economic index, and the coincident-to-lagging ratio remained unchanged, as a result. Meanwhile, real GDP fell at a 5.7 percent annual rate in the first quarter of the year, following a contraction of 6.3 percent in the fourth quarter of 2008.
The Conference Board LEI for the U.S. , which had been on a general downtrend since reaching a peak in July 2007, has risen sharply in the past two months amid widespread strengths among its components. With these large and extensive increases, the six-month change in the index has become positive for the first time in two years. The Conference Board CEI for the U.S., a measure of current economic activity, remains on a decreasing trend but its pace of decline has stabilized in recent months. All in all, the behavior of the composite indexes continues to suggest that the recession that began in December 2007 will likely ease in the near term.

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

The Conference Board LEI for the U.S. now stands at 100.2 (2004=100). Based on revised data, this index increased 1.1 percent in April and decreased 0.3 percent in March. During the six-month span through May, the leading economic index increased 1.2 percent, with five out of ten components advancing (diffusion index, six-month span equals 50 percent).

COINCIDENT INDICATORS. Two of the four indicators that make up The Conference Board CEI for the U.S. increased in May. 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 industrial production and employment.

The Conference Board CEI for the U.S. now stands at 100.7 (2004=100). This index decreased 0.3 percent in April and decreased 0.7 percent in March. During the six-month period through May, the coincident economic index decreased 3.3 percent, with none of the four components advancing (diffusion index, six-month span equals 0.0 percent).

LAGGING INDICATORS. The Conference Board LAG for the U.S. stands at 112.0 (2004=100) in May, with none of the seven components advancing. The negative contributors — beginning with the largest negative contributor — were average duration of unemployment (inverted), commercial and industrial loans outstanding*, change in labor cost per unit of output*, and change in CPI for services. The ratio of manufacturing and trade inventories to sales*, average prime rate charged by banks, and ratio of consumer installment credit to personal income* held steady in May. Based on revised data, the lagging economic index decreased 0.8 percent in April and decreased 0.6 percent in March.

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 June 17, 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.

The next release is scheduled for Monday, July 20, 2009 at 10 A.M. ET.

For further information contact:
Frank Tortorici
(1) 212 339 0231
f.tortorici@conference-board.org

Kenneth Goldstein
1 212 339 0331
ken.goldstein@conference-board.org

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

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