New York, NY, May 19--The Conference Board announced today that the U.S. leading index decreased 0.2 percent, the coincident index increased 0.2 percent and the lagging index increased 0.4 percent in April.
The leading index fell again in April, which is now the fourth consecutive decline because February’s small increase was revised down to a small decrease. The leading index has declined at a 1.0 percent annual rate over the last six months, and there have been more weaknesses than strengths among the components in recent months.
The coincident index, an index of current economic activity, increased again in April. 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 in the last year or two.
The leading index has been increasing since the end of 2001, but the upward trend has been briefly interrupted twice – once from May to October 2002 and again from June to October 2004. The recent weakness of the leading index is consistent with the economy continuing to expand in the near term, but at a slower pace.
Five of the ten indicators that make up the leading index increased in April. The positive contributors – beginning with the largest positive contributor – were average weekly initial claims for unemployment insurance (inverted), building permits, average weekly manufacturing hours, manufacturers’ new orders for nondefense capital goods, and manufacturers’ new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, real money supply, interest rate spread, stock prices, and vendor performance.
The leading index now stands at 114.5 (1996=100). Based on revised data, this index decreased 0.6 percent in March and decreased 0.1 percent in February. During the six-month span through April, the leading index decreased 0.5 percent, with six out of ten components advancing (diffusion index, six-month span equals sixty percent).
Three of the four indicators that make up the coincident index increased in April. The positive contributors to the index – beginning with the largest positive contributor – were employees on nonagricultural payrolls, personal income less transfer payments, and manufacturing and trade sales. The negative contributor was industrial production.
The coincident index now stands at 119.6 (1996=100). This index increased 0.2 percent in March and increased 0.1 percent in February. During the six-month period through April, the coincident index increased 1.2 percent.
The lagging index stands at 99.7 (1996=100) in April, with six of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were commercial and industrial loans outstanding, change in CPI for services, average prime rate charged by banks, change in labor cost per unit of output, ratio of manufacturing and trade inventories to sales, and ratio of consumer installment credit to personal income. The negative contributor was average duration of unemployment (inverted). Based on revised data, the lagging index decreased 0.2 percent in March and increased 0.3 percent in February.
