The U.S. leading index, a key barometer of economic conditions, inched up 0.1 percent in July, the Conference Board reported today.

The leading index now stands at 138.3. Based on revised data, this index increased 1.2 percent in June and remained unchanged in May. During the six-month span through July, the leading index increased 1.1 percent, with six out of 10 components advancing.

The leading index increased slightly in July following a sharp increase in June, which keeps it on a slightly rising trend. The leading index has increased at a 2.2 percent annual rate over the last six months, but this is down from a peak of about 10 percent growth at the end of 2003. The strengths among the components of the leading index have become somewhat more widespread in the last two months.

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

The coincident index, a measure of current economic activity, increased again in July. The coincident index has been increasing at a relatively steady 2.5 percent annual rate since April 2003, and the strength continues to be widespread. At the same time, the growth rate of real GDP has been fluctuating in the 3.5 percent to 4 percent annual rate range over the last year and a half.

The Conference Board is as nonprofit research and business group.

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