Leading Indicators Tick Higher for June

The Conference Board showed that the Coincident Economic Index rose by 0.2% in June to 112.5, after a 0.2% gain in May and a 0.3% gain in April. Overall, the main gain was in the Lagging Economic Index with a 0.7% gain in June to 117.6, and that is after a 0.1% gain in May and a 0.2% gain in the month of April.

Thursday’s report for June showed that it was the yield spread and building permits that continued to make large positive contributions to the index. The Conference Board said about the June leading indicators:

The upward trend in the US LEI seems to be gaining more momentum with another large increase in June pointing to continued strength in the economic outlook for the remainder of the year. Housing permits and the interest rate spread drove the latest gain in the LEI, while labor market indicators such as average workweek and initial claims remained unchanged.

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Six of the 10 indicators that make LEI were positive: interest rate spread, building permits, average consumer expectations for business conditions, the Leading Credit Index, manufacturers’ new orders for nondefense capital goods excluding aircraft, and the ISM new orders index. Stock prices declined, while average weekly manufacturing hours, average weekly initial claims for unemployment insurance, and manufacturers’ new orders for consumer goods and materials were unchanged in June.

While the “leading” indicators are actually for the month already past, it aims to act as a measurement of 10 different economic components as follows:

• Average weekly hours, manufacturing
• Average weekly initial claims for unemployment insurance
• Manufacturers’ new orders, consumer goods and materials
• ISM Index of New Orders
• Manufacturers’ new orders, nondefense capital goods excluding aircraft orders
• Building permits, new private housing units
• Stock prices, 500 common stocks
• Leading Credit Index
• Interest rate spread, 10-year Treasury bonds less federal funds
• Average consumer expectations for business conditions

Much of this report coincides with what the Chicago Fed National Activity Index showed earlier on Thursday.

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