A monthly index forecasting future economic activity in the United States rebounded in May to continue to signal expanding, albeit “choppy,” conditions.
“Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market. The economy will likely continue to grow through the summer and fall, however it will be choppy,” said Ken Goldstein, an economist with the Conference Board.
The business research and membership group reported that its Leading Economic Index (LEI) advanced eight-tenths of a percent to 114.7 in May.
Despite dropping four-tenths of a percent in April, the LEI has gained 3 percent over the past six months. While widespread strength among the leading indicators has persisted, the pace of growth in the index has slowed.
For May, eight of 10 components used to calculate the LEI increased: building permits, consumer expectations, interest rate spread, new orders for consumer and capital goods, the real money supply and stock prices. Moreover, average weekly claims for unemployment insurance were down. Supplier deliveries were down, while average weekly manufacturing hours held steady.
The Coincident Economic Index (CEI), a measure of current conditions, edged up a tenth of a percent to 102.9 in May. With gains in each of the last three months, the CEI has risen 1.2 percent over the past six months.
For May, all four components of the index advanced: nonfarm payrolls, personal income, productivity and sales.
The Lagging Economic Index (LAG), a measure of past performance, rose three-tenths of a percent to 109.1. The index has gained 1 percent over the past three months.
For May, three of seven components of the index advanced: business loans, labor costs and the price of services. The average duration of unemployment increased, while the average prime interest rate, consumer credit and inventories held steady.
“Overall, despite short-term volatility, the composite indexes still point to expanding economic activity in the coming months,” said Ataman Ozyildirim, another economist at the Conference Board.