New York, NY, July 21--The Conference Board said that based on the benchmarked figures announced today, its leading indicators index increased sharply in June following no change in May.
The index increased 0.9 percent in June, while the coincident index increased 0.2 percent and the lagging index increased 0.3 percent during the month.
The board said that the revised leading index has increased at a 1.2 percent annual rate over the last six months, but this is down from a peak of about 10.0 percent at the end of 2003. The strengths and weaknesses among the components of the leading index have been roughly balanced in recent months.
The coincident index, a measure of current economic activity, increased again in June. The coincident index has been increasing at a relatively steady 2.5 percent annual rate since April 2003, and the strength continues to be widespread. At the same time, the growth rate of real GDP has been fluctuating around a 4.0 percent annual rate over the last two years.
The leading index increased rapidly through the first quarter of 2004 but this has been followed by a steady slowing of growth through the first half of 2005. The sharp pick up in June keeps the leading index on a slightly rising trend, and this behavior is consistent with the economy continuing to expand moderately in the near term, but at a slower pace than in recent quarters.
Seven of the ten indicators that make up the leading index increased in June. The positive contributors – beginning with the largest positive contributor – were index of consumer expectations, vendor performance, real money supply, average weekly initial claims for unemployment insurance (inverted), interest rate spread, stock prices, and building permits.
The negative contributor was manufacturers’ new orders for nondefense capital goods. The average weekly manufacturing hours and manufacturers’ new orders for consumer goods and materials* held steady in June.
The leading index now stands at 137.7 (1996=100). Based on revised data, this index remained unchanged in May and increased 0.2 percent in April. During the six-month span through June, the leading index increased 0.6 percent, with five out of ten components advancing (diffusion index, six-month span equals fifty-five percent).
