The Latest Conference Board Leading Economic Index (LEI) for May is now available. The index rose 0.5 percent to 101.4 percent. April was revised down 0.1 percent (2004 = 100). The latest number came in slightly below the 0.6 percent forecast by Investing.com.
Here is an overview from the LEI technical notes:
The Conference Board LEI for the U.S. increased for the fourth consecutive month in May. 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 LEI increased 2.3 percent (about a 4.7 percent annual rate), slower than the growth of 3.5 percent (about a 7.2 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators remained widespread. [Full notes in PDF]
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 weakened in 2012 but began trending higher in the latter part of the year.
For a more details on the latest data, here is an excerpt from the press release:
“May’s increase in the LEI, the fourth consecutive one, was broad based,” said 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.”
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.