Thursday, July 21, 2011

USA Monthly Leading Economic Index at Another Post-Recession High! (Chart) "Slowly expanding economic activity in coming months"

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The Conference Board: USA Monthly Leading Index


Official Statement by The Conference Board The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.3 percent in June to 115.3 (2004 = 100), following a 0.8 percent increase in May, and a 0.3 percent decline in April. The largest positive contributions came from money supply, the interest rate spread, and building permits.

Commenting on the USA LEI Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI continued to increase in June, but the strengths among the leading indicators have been balanced with the weaknesses in recent months. The Coincident Economic Index, a monthly measure of current economic activity, continued to increase slowly. The leading indicators point to slowly expanding economic activity in the coming months.” Says Ken Goldstein, economist at The Conference Board: “The economy faced some recent unexpected headwinds, including a shortage of auto and electronic parts from Japan after the earthquake, and damaging tornado and flooding activity in the U.S. Another potential headwind is the debt ceiling issue, which could result in a financial crisis in the near term if not resolved. If these headwinds subside, the underlying trend of slow growth, as suggested by the LEI, should become more apparent over the next few months."

Trend The short-term trend has continues upwards with 2 consecutive monthly increases. The intermediate-term trend (6-month moving average) has continued upwards since April 2009. The long-term trend (12-month moving average) trends also continues upwards and has since 2009. The June 2011 increase is the 25th increase in the past 27 months (since the March 2009 Great Recession cyclical low of 97.9).

Cycle History The Leading Economic Index for June 2011 is at a Post-Great Recession cyclical high of 115.3, which exceeds the previous high in May 2011 of 114.9. The Great Recession cyclical low was 97.9 in March 2009.

Monthly Leading Economic Index (Chart) Below is a chart of the The Conference Board LEI from the March 2009 Great Recession cyclical low of 97.9 through the latest month reported.


Commentary The June 2011 Leading Economic Index (preliminary) is very encouraging and a Post-Great Recession cyclical high of 115.3. This indicates slow USA economic expansion, "an underlying trend of slow growth". The USA Monthly LEI has come a long way from the March 2009 cyclical low of 97.9. (See chart above)


About The Conference Board Leading Economic Index (LEI) for the U.S.

The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.

The ten components of The Conference Board Leading Economic Index for the U.S. include:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
Index of supplier deliveries – vendor performance
Manufacturers' new orders, nondefense capital goods
Building permits, new private housing units
Stock prices, 500 common stocks
Money supply, M2
Interest rate spread, 10-year Treasury bonds less federal funds
Index of consumer expectations


About The Conference Board

The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.


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