Leading index forecasts economic slowing in U.S.

Justyne Zabinska-La Monica

A monthly index forecasting economic conditions in the United States continues to decline, signaling a worsening outlook.

The Conference Board reported its Leading Economic Index declined six-tenths of a percent to 107.5 in April. The index has retreated for 13 consecutive months.

A separate measure of current conditions increased, while a measure of past performance slipped

“The LEI continues to warn of an economic downturn this year,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board.

The New York-based think tank forecast economic slowing starting in the second quarter leading to a mild recession by the middle of this year.

The Leading Economic Index dropped 4.4 percent over the past six months, a bigger decline than the 3.8 percent drop over the previous six-month span.

Gross domestic product, the broad measures of goods and services produced in the country, grew at an annual rate of 1.1 percent in the first quarter after increasing 2.6 percent in the fourth quarter.

For April, six of 10 indicators of the Leading Economic Index retreated, including building permits, consumer expectations for business conditions, interest rate spread and leading credit and new orders indexes. An increase in initial claims for unemployment benefits also pulled down the index. New orders for both capital and consumer goods increased, as did stock prices. The average manufacturing work week held steady.

The Coincident Economic Index rose three-tenths of a percent to 110.2. The index increased seven-tenths of a percent over the past six months.

For April, all four indicators advanced — industrial production, nonfarm payrolls, personal income and sales.

The Lagging Economic Index edged down a tenth of a percent to 118.3. The index held steady over the past three months.

For April, three of seven components of the index declined, including the costs of labor and services. An increase in the average duration of unemployed also pulled down the index. The average prime rate charged by banks increased. Consumer credit, commercial and industrial financing and inventories all held steady.