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

Press Release / News

July 20, 2009

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The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 0.7 percent, The Conference Board Coincident Economic Index™ (CEI) decreased 0.2 percent and The Conference Board Lagging Economic Index™ (LAG) decreased 0.7 percent in June.

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The Conference Board LEI for the U.S. increased for the third consecutive month in June. Most of the components contributed positively to the index this month except real money supply* and manufacturers' new orders for nondefense capital goods*. The six-month change in the index has risen to 2.0 percent (a 4.1 percent annual rate) in the period through June, up substantially from - 3.1 percent (a –6.2 percent annual rate) for the previous six months, and the strengths among the leading indicators have remained balanced with the weaknesses in recent months.
The Conference Board CEI for the U.S. continued to decrease in June, amid further contractions in employment and industrial production. Between December 2008 and June 2009, the index fell 3.0 percent (a –5.9 percent annual rate), slightly faster than the decline of 2.8 percent (a –5.6 percent annual rate) for the previous six months. In June, the lagging economic index for the U.S. fell more than the coincident economic index, and the coincident-to-lagging ratio increased, as a result. Meanwhile, real GDP fell at a 5.5 percent annual rate in the first quarter of 2009, following a contraction of 6.3 percent annual rate in the fourth quarter of 2008.
The Conference Board LEI for the U.S. has risen for three consecutive months now, after having fallen steadily since reaching a peak in July 2007. With these large and widespread gains, its six month growth has picked up to the highest rate since the first quarter of 2006. Meanwhile, The Conference Board CEI for the U.S., measuring current economic activity, remains on a downtrend, but the pace of its decline has moderated somewhat in recent months. All in all, the behavior of the composite indexes suggest that the recession will continue to ease and that the economy may begin to recover in the near term.

LEADING INDICATORS. Seven of the ten indicators that make up The Conference Board LEI for the U.S. increased in June. The positive contributors – beginning with the largest positive contributor – were interest rate spread, building permits, stock prices, weekly initial claims (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*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations.

The Conference Board LEI for the U.S. now stands at 100.9 (2004=100). Based on revised data, this index increased 1.3 percent in May and increased 1.0 percent in April. During the six-month span through June, the leading economic index increased 2.0 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 June. 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 100.3 (2004=100). This index decreased 0.3 percent in May and decreased 0.3 percent in April. During the six-month period through June, the coincident economic index decreased 3.0 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 110.8 (2004=100) in June, with none of the seven components advancing. 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, the ratio of manufacturing and trade inventories to sales*, and the ratio of consumer installment credit to personal income*. The average prime rate charged by banks held steady in June. Based on revised data, the lagging economic index decreased 0.4 percent in May and decreased 0.9 percent in April.

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 July 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 Thursday, August 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.