Conference Board Leading Economic Index: Increased Growth In July

The latest Conference Board Leading Economic Index (LEI) for July increased to 110.7 from 110.0 in June. The Coincident Economic Index (CEI) came in at 104.2, up from 104.0 the previous month.

The Conference Board LEI for the U.S. increased again in July, with positive contributions from all its components, except for weekly manufacturing hours which was unchanged. In the sixmonth period ending July 2018, the leading economic index increased 2.7 percent (about a 5.5 percent annual rate), slower than the growth of 3.6 percent (about a 7.2 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have remained widespread, with the majority of components advancing over the past six months.

The Conference Board CEI for the U.S., a measure of current economic activity, also improved in July. The coincident economic index rose 1.4 percent (about a 2.7 percent annual rate) between January and July 2018, somewhat faster than the growth of 1.0 percent (about a 2.0 percent annual rate) over the previous six months. The strengths among the coincident indicators remain very widespread. The lagging economic index declined, while the CEI continued to improve. As a result, the coincident-to-lagging ratio is up slightly. Real GDP expanded at a 4.1 percent annual rate in the second quarter, after increasing 2.2 percent (annual rate) in the first quarter. [Full notes in PDF]

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

For additional perspective on this indicator, see the latest press release, which includes this overview:

“The U.S. LEI increased in July, suggesting the US economy will continue expanding at a solid pace for the remainder of this year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The strengths among the components of the leading index were very widespread, with unemployment claims, the financial components, and the ISM® New Orders Index making the largest positive contributions”.