The Conference Board recently released a report stating that the Conference Board Leading Economic Index (LEI) for the United States increased for the fourth consecutive month in May. The report shows that the LEI rose 0.5% in May to 101.7, following a 0.3% increase in April, and a 1.0% increase in March.
According to the report, positive contributions from all the financial and labor components of the leading economic index more than offset the large negative contribution from building permits. In the six-month period ending May 2014, the index improved 2.3%, or about a 4.7% on an annualized basis. But it is slower than the growth of 3.5%, about a 7.2% annual rate, during the previous six months.
“May’s increase in the LEI, the fourth consecutive one, was broad based,” stated Ataman Ozyildirim, Economist at The Conference Board. “Housing permits held the index back slightly, but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year.”
“Recent data suggest the economy is finally moving up from a 2 percent growth trend to a more robust expansion,” said Ken Goldstein, Economist at The Conference Board. “The CEI shows the pace of economic activity continued to gain traction in May, while the trend in the LEI remains positive. Going forward, the biggest challenge is to sustain the rise in income growth, which will drive consumption.”
In addition, the Conference Board Coincident Economic Index (CEI) showed an increase of 0.3% in May to 109.0, compared to a 0.2% increase in April, and a 0.4% increase in March. The Conference Board Lagging Economic Index (LAG) was up 0.4% in May to 123.8. It is followed a 0.3% increase in April, and a 0.6% increase in March.
The report states that seven of the 10 indicators –making up the Conference Board LEI for the U.S. – increased in May. The positive contributors were the interest rate spread, average weekly initial claims for unemployment insurance, average weekly manufacturing hours, the Leading Credit Index, stock prices, the ISM new orders index, and manufacturers’ new orders for consumer goods and materials. The negative contributor was building permits.