Conference Board's Leading Index Up In June, Reversing Recent Weakness

Manufacturers' new orders help boost the index.

The Conference Board said Thursday that the U.S. leading index, a widely watched gauge of expectations for future economic growth, increased by 0.1 percent June, following two consecutive monthly declines.

The coincident index increased 0.2 percent and the lagging index increased by 0.6 percent.

Six of the ten indicators that make up the leading index increased in June. The positive contributors were average weekly initial claims for unemployment insurance, the 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 were vendor performance, building permits, and stock prices. The manufacturers' new orders for consumer goods and materials held steady in June.

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.

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.

The coincident index, a measure of current economic activity, continued to increase steadily as it has since September 2005, the Conference Board said. But its growth moderated slightly in the second quarter of 2006. From December to June, the coincident index grew 1.1 percent, and employment and industrial production were the major contributors to this growth.

All four indicators that make up the coincident index increased in June. The positive contributors to the index were industrial production, personal income less transfer payments, employees on nonagricultural payrolls, and manufacturing and trade sales.

More in Supply Chain