A monthly index forecasting economic performance in the United States continues to increase even as the outlook for the second half of 2015 improves.
The Conference Board reported that its Leading Economic Index rose seven-tenths of a percent to 123.1 in May. Separate measures of current and past economic conditions also increased.
The indexes suggest an expansion in economic activity should continue, and the pace of growth could moderately increase during the second half.
“The U.S. LEI increased sharply again in May, confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” said Ataman Ozyildirim, director of business cycles and growth research at the Conference Board, a business research and membership association.
“While residential construction and consumer expectations support the more positive outlook, industrial production and new orders in manufacturing are painting a somewhat more mixed picture,” Ozyildirim added.
The leading index has climbed 2.2 percent over the past six months, slower than the 3.4 percent gain in the six-month span before that. However, the strength of the 10 components of the index has become more widespread.
Gross domestic product, the broad measure of goods and services produced in the country, contracted seven-tenths of a percent during the first quarter of 2015 after expanding 2.2 percent during the fourth quarter of 2014.
For May, nine of the 10 components of the leading index advanced, including building permits, consumer expectations, interest rate spread, a leading credit index, new orders for both capital and consumer goods, a new orders index and stock prices. A decrease in average weekly initial claims for unemployment insurance also bolstered the index. Average manufacturing hours held steady.
The Coincident Economic Index, a measure of current conditions, edged up a tenth of a percent to 112.1 in May. The index has increased eight-tenths of a percent over the past six months.
For May, three of four indicators of the index advanced: nonfarm payrolls, personal income and sales. Industrial production retreated.
The Lagging Economic Index, a measure of past conditions, rose two-tenths of a percent to 117 in May. The index has increased nine-tenths of a percent over the past three months.
For May, three of seven components of the index advanced, including consumer credit and inventories. A drop in the average duration of unemployment also pulled up the index. Labor costs declined. The average prime rate charged by banks, commercial and industrial financing and the cost of services all remained unchanged.