The Conference Board today announced that the U.S. leading index declined for the second consecutive month in July, falling 0.3 percent from June.

The leading index now stands at 116 (1996=100). Based on revised data, this index decreased 0.1 percent in June and increased 0.4 percent in May. During the six-month span through July, the leading index increased 1 percent, with seven out of 10 components advancing (diffusion index, six-month span equals 70 percent).

The leading index in the last two months has been plagued by widespread weakness. Although it is too soon to conclude that these declines end the upward trend in the leading index underway since March 2003, this weakness has slowed the growth rate of the leading index into the range of 1 percent to 2 percent (annual rate).

At the same time, real GDP growth slowed to a 3 percent annual rate in the second quarter of 2004, down from a 5 percent average rate over the preceding four quarters.

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

The Conference Board is a nonprofit research and business group.

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