The U.S. leading index, a key barometer of economic conditions, fell 0.6 percent in May, the Conference Board reported today, and now stands at 137.9.

May’s decrease marked the third decline in the last six months. Based on revised data, this index decreased 0.1 percent in April and increased 0.4 percent in March.

The largest negative contributors to the leading index last month were initial claims for unemployment insurance and the index of consumer expectations. From November to May, the leading index fell by 0.2 percent, and declining housing permits made the largest negative contribution over this period.

Only three of the 10 indicators that make up the leading index increased in May. Among the positive contributors were manufacturers’ new orders for nondefense capital goods, manufacturers’ new orders for consumer goods and materials, and interest-rate spread. Other negative contributors included real money supply, average weekly manufacturing hours, building permits, stock prices and vendor performance.

After a pick up at the end of 2005 and beginning of 2006, the leading index has fallen slightly below its level at the end of 2005. Correspondingly, economic activity and real GDP growth (a 5.3 percent annual rate) picked up in the first quarter of 2006. But, the current behavior of the leading index so far suggests the rapid pace of economic activity in the first quarter is unlikely to be sustained and economic growth should continue, but at a slow to moderate rate in the near term.

The Conference Board is a nonprofit research and business group.

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