Conference Board Leading Economic Index for May; 2020

The Conference Board Leading Economic Index® (LEI) for the U.S. Improved in May
Initial shock to the economy may be behind us, but recovery path remains highly uncertain

NEW YORK, June 18, 2020…The Conference Board Leading Economic Index® (LEI) for the U.S. increased 2.8 percent in May to 99.8 (2016 = 100), following a 6.1 percent decline in April, and a 7.5 percent decline in March.

“In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 1.1 percent in May to 95.3 (2016 = 100), following a 10.4 percent decline in April and a 2.2 percent decline in March.

The Conference Board Lagging Economic Index® (LAG) for the U.S. declined 1.9 percent in May to 111.4 (2016 = 100), following a 1.7 percent increase in April, and a 2.4 percent increase in March.

About The Conference Board Leading Economic Index® (LEI) for the U.S.
The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.

The ten components of The Conference Board Leading Economic Index® for the U.S. include:

Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
ISM® Index of New Orders
Manufacturers’ new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index™
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions

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National residential construction metrics; May 2020

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Conference Board Employment Trends Index; 5/20

The Conference Board Employment Trends Index™ (ETI) Increased in May
Employment will continue growing through the summer

NEW YORK, June 8, 2020…The Conference Board Employment Trends Index™ (ETI) increased in May, following sharp declines in March and April. The index now stands at 46.28, up from 42.53 (a downward revision) in April. However, the index is down 57.9 percent from a year ago.

“The Employment Trends Index increased in May. Seven of the eight components made positive contributions to the index, suggesting that the number of jobs will grow in the coming months,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “The number of workers returning to work is larger than the number of new layoffs. That was the case in May and will likely be the case moving forward. Just to put things in perspective, the job gains in May recouped just 11 percent of the jobs lost in March and April. Just how much consumers will increase their spending – and how many new workers employers are willing to hire during such uncertain times – remains to be seen. Also, layoffs are far from over. According to a recent survey by The Conference Board, many human resource executives at large companies say their organizations plan on laying off workers in the coming months. By the end of 2020, the employment level in the US may still be 10 million below where it stood in February – a difficult time for the class of 2020 to enter the labor market.”

May’s increase was fueled by positive contributions from seven of the eight components. From the largest positive contributor to the smallest, these were: Job Openings, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, the Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Industrial Production, the Ratio of Involuntarily Part-time to All Part-time Workers, and the Number of Employees Hired by the Temporary-Help Industry.

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index include:

Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey®)
Initial Claims for Unemployment Insurance (U.S. Department of Labor)
Percentage of Firms With Positions Not Able to Fill Right Now (© National Federation of Independent Business Research Foundation)
Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
Job Openings (BLS)**
Industrial Production (Federal Reserve Board)*
Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)**

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Conference Board commentary on May jobs report

May’s Job Report Beat Expectations, Reflecting Reopening of Economy

Comment on U.S. Bureau of Labor Statistics Employment Situation Report
Gad Levanon, Head of the Labor Markets Institute, The Conference Board

May’s job report was much more positive than expectations. Employment increased by 2.5 million, and the unemployment rate dropped to 13.3 percent from 14.7 in April. The unemployment rate does not fully reflect the size of the labor market slack, as many workers experienced a significant cut in weekly hours, and many of those who lost jobs have left the labor market altogether.

The increase in the number of jobs simply reflects the opening of the economies in many states. Just to put things in perspective, the number of jobs in the US is still almost 20 million below the February level.

The increase in employment was across most industries, with the most notable exception being the government. The number of jobs in government dropped by 585,000 in May after a 963,000 drop in April. The decline in tax revenue in state and local governments is forcing them to shed workers.

The number of jobs is likely to sharply grow further in the next 2-3 months as states continue to relax social distancing restrictions. The big question is how willing consumers will be to spend on consumption categories that pose a contagion risk. They will probably spend less on categories that both pose a high contagion risk and could more easily be avoided for a while, such as entertainment and flights. A full recovery in employment is unlikely to occur in the next 12 months.

About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.

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TBJ article on RTP housing market

Raleigh-Durham housing market bounces b..

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Wake County register of deeds report on residential market; May 2020


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Mortgage applications up 18% for week 4 May 2020


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FHFA House Price Index rankings by metro area for 1Q/20


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National new home sales for April; 2020

Click to access newressales.pdf

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Conference Board Consumer Confidence Index for May; 2020

The Conference Board Consumer Confidence Index Stabilizes in May

New York, May 26, 2020…The Conference Board Consumer Confidence Index® held steady in May, following a sharp decline in April. The Index now stands at 86.6 (1985=100), up from 85.7 in April. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined from 73.0 to 71.1. However, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved from 94.3 in April to 96.9 this month.

The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was May 14.

“Following two months of rapid decline, the free-fall in Confidence stopped in May,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The severe and widespread impact of COVID-19 has been mostly reflected in the Present Situation Index, which has plummeted nearly 100 points since the onset of the pandemic. Short-term expectations moderately increased as the gradual re-opening of the economy helped improve consumers’ spirits. However, consumers remain concerned about their financial prospects. In addition, inflation expectations continue to climb, which could lead to a sense of diminished purchasing power and curtail spending. While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads.”

Consumers’ assessment of current conditions declined further in May. The percentage of consumers claiming business conditions are “good” decreased from 19.9 percent to 16.3 percent, while those claiming business conditions are “bad” increased from 45.3 percent to 52.1 percent. Consumers’ appraisal of the job market was mixed. The percentage of consumers saying jobs are “plentiful” decreased from 18.8 percent to 17.4 percent, however those claiming jobs are “hard to get” decreased from 34.5 percent to 27.8 percent.

Consumers, however, were moderately more optimistic about the short-term outlook. Those expecting business conditions will improve over the next six months increased from 39.8 percent to 43.3 percent, while those expecting business conditions will worsen decreased, from 25.1 percent to 21.4 percent.

Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead declined from 41.2 percent to 39.3 percent, however those anticipating fewer jobs in the months ahead also decreased, from 21.2 percent to 20.2 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase declined from 17.2 percent to 14.0 percent, however the proportion expecting a decrease declined from 18.4 percent to 15.0 percent.

Source: May 2020 Consumer Confidence Survey®
The Conference Board

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