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