Conference Board Leading Economic Index Increased In June

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Doug Short
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Summary

  • The latest Conference Board Leading Economic Index (LEI) for June was up 2.0% from the May final figure of 100.0.
  • The LEI has historically dropped below its six-month moving average anywhere between 2 to 15 months before a recession.
  • The latest reading of the smoothed rate-of-change suggests no near-term recession risk.

By Jill Mislinski

The latest Conference Board Leading Economic Index (LEI) for June was up 2.0% from the May final figure of 100.0. Here's an excerpt from the technical notes:

The Conference Board LEI for the U.S. increased for a second consecutive month in June, fueled mostly by positive contributions from declining initial claims for unemployment insurance, increasing average hours worked in manufacturing and increasing stock prices. In the first half of 2020, the leading economic index declined 8.4 percent (about a -16.2 percent annual rate), much faster than the slightly negative growth of 0.2 percent (about a -0.4 percent annual rate) over the second half of 2019. In addition, over the first six months of 2020, the weaknesses among the leading indicators became very widespread.

The Conference Board CEI for the U.S., a measure of current economic activity, also increased in June. However, over the past six months the coincident economic index has declined 9.8 percent (about a -18.6 percent annual rate), a reversal from the growth of 0.8 percent (about a 1.5 percent annual rate) over the last six months of 2019. In addition, the weaknesses among the coincident indicators have remained very widespread, with all components declining over the first half of this year. The lagging economic index declined in the past two months, while CEI has been increasing slowly. As a result, the coincident-to-lagging ratio improved in June. In the meantime, real GDP contracted at a 5.0 percent annual rate in the first quarter.

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.

Conference Board

For additional perspective on this indicator, see the latest press release

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