A monthly index forecasting economic conditions in the United States has increased for a third consecutive month, but still signals slowing growth.
The Conference Board reported its Leading Economic Index rose 1.4 percent to 104.4 in July. The latest gain follows a 3 percent increase in June and 3.1 percent increase in May.
“Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam,” said Ataman Ozyildirim, senior director of economic research at the Conference Board. “The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”
The LEI has dropped 6.8 percent over the past six months, down from no growth over the six months before that. Weaknesses among leading indicators have become more widespread.
Gross domestic product, the broad measure of goods and services produced in the country, contracted at an annual rate of 32.9 percent during the second quarter after slipping 5 percent in the first quarter.
For July, six of 10 indicators of the LEI advanced, including average weekly manufacturing hours, building permits, interest rate spread, a new orders index and stock prices. A decline in average weekly claims for unemployment insurance also bolstered the index. Consumer expectations for business conditions, a leading credit index and new orders for both capital and consumer goods all declined.
The Coincident Economic Index, a measure of current conditions, increased 1.2 percent to 99.2. The index has increased in each of the last three months, but decreased 7.6 percent over the past six months.
For July, all four components of the index advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past performance, fell 1 percent to 109.2. The index has declined 5.6 percent over the past three months.
For July, consumer credit and cost of services increased. Commercial and industrial financing, inventories and labor costs decreased. An increase in the average duration of unemployment also pulled down the index. The average prime rate charged by banks held steady.