A monthly index forecasting economic performance in the United States continues to rise, signaling growth in the second of the year.
The Conference Board reported that its Leading Economic Index climbed another three-tenths of a percent to 102.2 in June. The latest monthly gain was the fifth in a row and brings the total increase over the past six months to 1.3 percent.
“Broad-based increases in the LEI over the last six months signal an economy that is expanding in the near term and may even somewhat accelerate in the second half,” said Ataman Ozyildirim, an economist with the Conference Board.
“Housing permits, the weakest indicator during this period, reflects some risk to the improving outlook. But favorable financial conditions, generally positive trends in the labor markets and the outlook for new orders in manufacturing have offset the housing market weakness over the past six months,” Ozyildirim said.
Ken Goldstein, another economist with the business research and membership association, agreed. “Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy. In addition to a stronger housing market, more business investment could also provide an upside to the overall economy.”
For June, six of the 10 indicators of the Leading Economic Index advanced: interest rate spread, leading credit and new orders indexes, new orders for capital and consumer goods and stock prices. A decrease in average weekly manufacturing hours and an increase in initial claims for unemployment benefits pulled down the index. Consumer expectations for business conditions held steady.
The Coincident Economic Index, a measure of current economic performance, rose two-tenths of a percent to 109.2 in June. The index has climbed 1.3 percent over the past six months.
For June, all four indicators of the index advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past economic performance, increased a half of a percent to 124.4 in June.
For June, five of seven components of the index advanced: commercial and industrial finance, consumer credit, inventories and labor costs. A decrease in the average duration of unemployment also pulled up the index. The cost of services retreated, while the average prime rate charged by banks held steady.