An index forecasting economic performance in the United States has dropped for a second time in three months, a signal the laggard pace of growth could slow even more.
The Conference Board reported that its Leading Economic Index (LEI) fell three-tenths of a point to 95.6 in June as building permits and factory orders fell and initial claims for unemployment insurance rose. Separate measures of current and past economic performance increased, however.
“The LEI is pointing to no strengthening over the next few months as the economy continues to sail through strong headwinds domestically and internationally,” said Ken Goldstein, an economist with the Conference Board, a business research and membership group.
Ataman Ozyildirim, another economist with the group, said the pace of growth in the LEI has slowed even as strengths among the components of the index have become less widespread. Declines in consumer expectations and factory orders have offset gains in financial, labor and construction-related components, Ozyildirim said.
Based on revised information, the LEI rose four-tenths of a percent in May and fell a tenth in April. Over the six-month span ending in June, the index has advanced 1 percent.
By comparison, gross domestic product, the broad measure of goods and services produced in the country, expanded at an annual rate of 1.9 percent in the first quarter.
For June, six of 10 components of the LEI declined, including building permits, consumer expectations, new orders for manufactured capital goods and stock prices. Moreover, initial claims for unemployment insurance increased. Four components increased: average weekly manufacturing hours, interest rate spread, a leading credit index and new orders for manufactured consumer goods.
The Coincident Economic Index (CEI), a measure of current performance, rose two-tenths of a percent in June to 104.5. Counting gains in May and April, the CEI has advanced eight-tenths of a percent over the six-month period ending in June.
For June, all four components of the index increased: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index (LAG), a measure of past performance, also increased two-tenths of a percent in June to climb to 115.5. The index has advanced 1.1 percent over the past three months.
For June, two components of the index rose, two fell and three held steady. Labor costs and consumer credit increased. Commercial and industrial financing fell even as the average length of unemployment increased. The average prime rate charged by banks, inventories and the price for services all remained unchanged.