An increase in a monthly index forecasting economic performance in the United States signals moderate growth through the end of the year.
The Conference Board reported that its Leading Economic Index rose four-tenths of a percent to 124.3 in July. Separate measures of current and past economic conditions also increased.
“The U.S. LEI picked up again in July, suggesting moderate economic growth should continue through the end of 2016. There may even be some moderate upside growth potential if recent improvements in manufacturing and construction are sustained and average consumer expectations don’t deteriorate further,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.
The Leading Economic Index has increased 1.1 percent over the past six months as strengths among its components have become more widespread.
Gross domestic product, the broad measure of goods and services produced in the country, grew 1.2 percent during the second quarter after increasing eight-tenths of a percent in the first quarter.
For July, eight of 10 indicators of the Leading Economic Index advanced, including average weekly manufacturing hours, interest rate spread, a leading credit index, a new orders index, new orders for both consumer and capital goods and stock prices. A decrease in average weekly initial claims for unemployment insurance also bolstered the index. Consumer expectations for business conditions retreated. Building permits held steady.
The Coincident Economic Index, a measure of current conditions, rose four-tenths of a percent to 113.9. The index has increased seven-tenths of a percent over the past six months.
For July, all four indicators of the index advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past performance, edged up a tenth of a percent to 121.8. The index has increased four-tenths of a percent over the past three months.
For July, three of seven indicators of the index retreated, including commercial and industrial financing and the cost of services. An increase in the average duration of unemployment also pulled down the index. Consumer credit and inventories advanced. The average prime rate charged by banks and labor costs remained unchanged.