New York, NY, July 20, 2006--The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index increased 0.2 percent and the lagging index increased 0.6 percent in June.
The leading index increased slightly in June, following two consecutive declines. The largest negative contributors to the leading index in June were vendor performance and building permits. From December to June, the leading index fell by 0.3 percent (a -0.6 percent annual rate). Declining housing permits continued to be the largest negative contributor over this period.
The coincident index, a measure of current economic activity, continued to increase steadily as it has since September 2005. But its growth moderated slightly in the second quarter of 2006. From December to June, the coincident index grew 1.1 percent (a 2.2 percent annual rate), and employment and industrial production were the major contributors to this growth.
The leading index has fallen below its most recent high reached in January and the strengths among the leading indicators have gradually become less widespread in recent months. The current behavior of the leading index suggests that economic growth should continue, but at a slow to moderate rate in the near term.
Six of the ten indicators that make up the leading index increased in June. The positive contributors--beginning with the largest positive contributor--were average weekly initial claims for unemployment insurance (inverted), index of consumer expectations, real money supply, average weekly manufacturing hours, interest rate spread, and manufacturers' new orders for nondefense capital goods. The negative contributors--beginning with the largest negative contributor--were vendor performance, building permits, and stock prices. The manufacturers' new orders for consumer goods and materials* held steady in June.
The leading index now stands at 138.1 (1996=100). Based on revised data, this index decreased 0.6 percent in May and decreased 0.1 percent in April. During the six-month span through June, the leading index decreased 0.3 percent, with five out of ten components advancing (diffusion index, six-month span equals fifty percent).
All four indicators that make up the coincident index increased in June. The positive contributors to the index-- beginning with the largest positive contributor--were industrial production, personal income less transfer payments*, employees on nonagricultural payrolls, and manufacturing and trade sales.
The coincident index now stands at 122.9 (1996=100). Based on revised data, this index increased 0.1 percent in May and increased 0.2 percent in April. During the six-month period through June, the coincident index increased 1.1 percent.
The lagging index stands at 123.7 (1996=100) in June, with all seven components advancing. The positive contributors to the index--beginning with the largest positive contributor--were average duration of unemployment (inverted), commercial and industrial loans outstanding, change in CPI for services, change in labor cost per unit of output, average prime rate charged by banks, ratio of consumer installment credit to personal income, and ratio of manufacturing and trade inventories to sales. Based on revised data, the lagging index increased 0.2 percent in both May and April.
