The Conference Board Leading Economic Index (LEI) for July was released this morning. The index inreased 0.4 percent to 95.8 (2004 = 100), following a 0.4 percent decline in June. The Briefing.com consensus had been for a 0.2 percent change. "Slow growth through the end of 2012" is the general forecast in today's press release.
Here is the overview of today's release from the LEI technical notes:
The Conference Board LEI for the U.S. increased in July after declining in the previous month. Positive contributions from initial claims for unemployment insurance (inverted), building permits and all of the financial components offset negative contributions from new orders and consumer expectations for business conditions. In the six-month period ending July 2012, the leading economic index increased by 1.2 percent (about a 2.3 percent annual rate), faster than the growth of 0.3 percent (about a 0.6 percent annual rate) during the previous six months. However, the strengths among the leading indicators have become somewhat less widespread in recent months.
[Full notes in PDF format]
Here is a chart of the LEI series with documented recessions as identified by the NBER.
And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough has been more or less flatlining in recent months.
For a more details on the latest data, here is an excerpt from the press release:
Says Ataman Ozyildirim, economist at The Conference Board: "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."
Says Ken Goldstein, economist at The Conference Board: "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."
For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.
Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.
And finally, here is the same snapshot, zoomed in to the data since 2000.
Check back next month for an updated analysis.