The Conference Board Leading Economic Index (LEI) for the U.S. increased again this month – but the authors believe the outlook is for “continued strength in the economic outlook for the remainder of the year.”

This index is designed to forecast the economy six months in advance. The market expected this index's month-over-month change at 0.1 % to 0.7 % (consensus 0.2%) versus the 0.6 % reported.

ECRI's Weekly Leading Index (WLI) is forecasting very slow growth over the next six months.

Additional comments from the economists at The Conference Board add context to the index's behavior.

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.6 percent in June to 123.6 (2010 = 100), following a 0.8 percent increase in May, and a 0.6 percent increase in April.

“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,” said Ataman Ozyildirim, Director, business Cycles and Growth Research, at The Conference Board. “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.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in June to 112.5 (2010 = 100), following a 0.2 percent increase in May, and a 0.3 percent increase in April.

z conference1.png

LEI as an Economic Monitoring Tool:

The usefulness of the LEI is not in the headline graphics but by examining its trend behavior. Econintersect contributor Doug Short (Advisor Perspectives / dshort.com) produces two trend graphics. The first one shows the six month rolling average of the rate of change – shown against the NBER recessions. The LEI has historically dropped below its six-month moving average anywhere between 2 to 15 months before a recession.