Leading index flat, but still signals growth

A monthly index forecasting economic performance in the United States remains unchanged, but continues to signal growth.

The Conference Board reported that its Leading Economic Index (LEI) held steady at 95.3 in June. Over the past six months, however, the index has increased 1.7 percent.

Separate measures of current and past economic performances increased in June.

“The U.S. LEI was flat in June. Declines in building permits, new orders and stock prices were offset by gains in consumer expectations, initial claims for unemployment insurance and other financial indicators. However, the LEI’s six-month growth rate remains positive, suggesting the economy will continue expanding through the end of the year,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership group.

Ken Goldstein, another economist with the Conference Board, described a mixed outlook.

“Some segments of the economy are turning around faster than others, resulting in positive, but moderate, growth. The biggest uncertainties remain the pace of business spending, the improvements in consumer spending power and the impact of slower global growth on U.S. exports,” Goldstein said.

For June, five of 10 indicators that make up the LEI increased.

Consumer expectations, the interest rate spread, a leading credit index and new orders for manufactured consumer goods and materials advanced.

Moreover, average weekly claims for unemployment benefits retreated.

Four indicators decreased: building permits, new orders for manufactured capital goods, a new orders index and stock prices.

Average weekly manufacturing hours remained unchanged.

The Conference Board Coincident Economic Index (CEI), a measure of current economic performance, increased two-tenths of a percent to 105.9 in June. Despite gains in each of the last three months, the CEI has declined two-tenths of a percent over the past six months.

For June, all four indicators of the CEI advanced: industrial production, nonfarm payrolls, personal income and sales.

The Lagging Economic Index (LAG), a measure of past economic performance,  increased three-tenths of a percent to 119 in June. The LAG has climbed nine-tenths of a percent over the past three months.

For June, three indicators of the LAG retreated: the cost of services, inventories and labor costs. Consumer credit advanced, while a decrease in the average duration of unemployment also bolstered the index.

Commercial and industrial financing and the average prime interest rate charged by banks held steady.