A monthly index forecasting economic conditions in the United States has increased for a fourth consecutive month, but still signals slowing growth.
The Conference Board reported its Leading Economic Index (LEI) rose 1.2 percent to 106.5 in August. The latest gain follows a 2 percent increase in July, 3 percent increase in June and 3.1 percent increase in May.
“While the U.S. LEI increased again in August, the slowing pace of improvement suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020,” said Ataman Ozyildirim, senior director of economic research at the Conference Board. “Looking ahead to 2021, the LEI suggests that the U.S. economy will start the new year under substantially weakened economic conditions.”
The LEI dropped 4.7 percent over the past six months, down from no growth over the six months before that.
Gross domestic product, the broad measure of goods and services produced in the country, contracted at an annual rate of 31.7 percent during the second quarter in the midst of the coronavirus pandemic.
For August, five of 10 indicators of the LEI advanced, including average weekly manufacturing hours, interest rate spread, a new orders index and stock prices. A decline in average weekly claims for unemployment insurance also bolstered the index. Building permits, consumer expectations for business conditions, a leading credit index and new orders for capital and consumer goods declined.
The Coincident Economic Index, a measure of current conditions, increased six tenths of a percent to 100.8. The index has decreased 6.4 percent over the past six months.
For August, three of four components of the index advanced: industrial production, nonfarm payrolls and personal income. Sales retreated.
The Lagging Economic Index, a measure of past performance, fell six-tenths of a percent to 107.6. The index has declined 4.7 percent over the past three months.
For August, consumer credit and inventories advanced. Commercial and industrial financing and the cost of both labor and services retreated. An increase in the average duration of unemployment also pulled down the index. The average prime rate charged by banks held steady.