The Conference Board today announced that the U.S. leading index decreased 0.2 percent in June from the previous month.

The leading index now stands at 116.2 (1996=100). Based on revised data, this index increased 0.4 in May and increased 0.1 percent in April. During the six-month span through June, the leading index increased 1.5 percent, with eight out of 10 components advancing (diffusion index, six-month span equals 80 percent).

The decrease in leading index for June is the first decline since March 2003, and May’s increase was revised down slightly. June’s weakness was not widespread, and some of the decline was from the average manufacturing workweek (which was most likely the result of many businesses being closed for President Reagan’s funeral). 

While the leading index is still on an upward trend, its growth rate has slowed in recent months – into the 2.5 to 3.5 percent range (annual rate). The current behavior of the leading index is consistent with real GDP increasing at a 4 percent to 5 percent annual rate in the near term.

Five of the 10 indicators that make up the leading index increased in June. The positive contributors – beginning with the largest positive contributor – were index of consumer expectations, stock prices, average weekly initial claims for unemployment insurance (inverted), manufacturers’ new orders for nondefense capital goods, and manufacturers’ new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were building permits, average weekly manufacturing hours, vendor performance, real money supply, and interest-rate spread.

The Conference Board is a nonprofit research and business group.

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