Economic Update: US Leading Economic Index
The Conference Board reported that their Leading Economic Index rose +0.4% in July to a reading of 95.8, which was above the consensus for an increase of +0.2% (June: -0.4%, May +0.4%)
The Conference Board’s Ataman Ozilidrim said, “With this month’s increase, the U.S. LEI returned to its May level. The majority of its components improved, led by large contributions from housing permits and initial unemployment claims. The LEI’s six-month growth rate seems to be stabilizing, pointing to a continuing but slow expansion in economic activity for the rest of the year. Meanwhile, the coincident economic index, a measure of current conditions, has been rising slowly but steadily, with all four components improving over the last six months.”
Ken Goldstein, an economist at The Conference Board, said, “The indicators point to slow growth through the end of 2012. Lack of domestic demand remains a big issue. However, back-to-school sales are better than expected, suggesting that the consumer is starting to come back. Retail sales this time of year are often an indicator of how the holiday season will turn out.”
The Conference Board Coincident Economic Index (CEI) for the U.S. rose by +0.3% to 105.1.
About the LEI: The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.
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