Leading Economic Indicators Rise Again in May

Washington, DC, June 18, 2010--The index of leading economic indicators rose 0.4% in May, following no growth in April, the Conference Board reported Thursday.

Economists had expected the index to gain 0.7%. While strength among the indicators has remained widespread in recent months, the six-month change in the index has slowed down to 3.9% through May, less than 5.2% for the prior six months.

Public debt and deficits are weighing "heavily on growth prospects on both sides of the Atlantic," said Bart van Ark, the Conference Board's chief economist, in a statement.

"We project a serious slowdown in European growth in 2011, which could further weaken the U.S. outlook," van Ark said.

Meanwhile, the coincident index rose 0.4% in May, matching the prior month's rate. The indicators in this index are the same ones used by the National Bureau of Economic Research to judge whether the economy is in a recession.

"Taken together, the current behavior of the composite indexes suggests that the economy will continue to recover, but the recent rapid expansion is not likely to be sustained in the near term," the Conference Board said.

Five of the 10 indicators that make up the leading index rose in May, with the largest positive contribution from the interest rate spread. The other positive indicators were the real money supply, average weekly manufacturing hours, the index of consumer expectations, and manufacturers' new orders for consumer goods and materials.

The largest negative contribution came from stock prices. The other negative indicators were building permits, manufacturers' new orders for nondefense capital goods, the index of supplier deliveries and average weekly jobless claims.