The Conference Board US Leading Economic Index® Continued to Decline in July

The Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released on Thursday (8-17-23) its latest Leading Economic Index® (LEI) for the US. According to the report, the LEI declined 0.4% in July to a reading of 105.8 (2016=100), after posting declines of 0.7% in June and 0.6% in May. The LEI has dropped 4.0% over the six-month period from January to July—a slight deterioration from its 3.7% contraction over the previous six-month period (July 2022 to January 2023).

The Conference Board Coincident Economic Index® (CEI) increased 0.4% in July to a reading of 110.5 (2016=100), after no change in June and increasing 0.2% in May. The CEI has increased by 0.7% over the six-month period from January to July—down from the 0.9% growth it recorded over the previous six months. The CEI’s component indicators (payroll employment, personal income less transfer payments, manufacturing trade and sales, and industrial production) are included among the data used to determine recessions in the US. Industrial production erased some of the losses reported in June and May and made the strongest positive contribution to July’s CEI, followed by income, employment, and sales.

The Conference Board Lagging Economic Index® (LAG) was unchanged in both July and June at 118.3 (2016=100) (and after improving 0.1% in May). The LAG has increased 0.1% over the six-month period from January to July—substantially below the growth rate of 2.5% over the previous six-month period.

Adding additional background and her analysis to the report, Senior Manager, Business Cycle Indicators, at the Conference Board Justyna Zabinska-La Monica said:

“The US LEI—which tracks where the economy is heading—fell for the sixteenth consecutive month in July, signaling the outlook remains highly uncertain. On the other hand, the coincident index (CEI)—which tracks where economic activity stands right now—has continued to grow slowly but inconsistently, with three of the past six months not changing and the rest increasing. As such, the CEI is signaling that we are currently still in a favorable growth environment. However, in July, weak new orders, high interest rates, a dip in consumer perceptions of the outlook for business conditions, and decreasing hours worked in manufacturing fueled the leading indicator’s 0.4 percent decline.

The leading index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead. The Conference Board now forecasts a short and shallow recession in the 2023Q4 to 2024Q1 timespan.”