The Conference Board US Leading Economic Index Slows Further in July

The Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released on Monday its US Leading Economic Indicators for July.

• The Leading Economic Index® (LEI) fell by 0.6% in July to a reading of 100.4 (2016=100), following a decline of 0.2% in June. Over the six-month period ending in July, the LEI fell by 2.1%—a slower rate of decline than the 3.1% decline reported over the six-month period (July 2023 to January 2024).
• The Coincident Economic Index® (CEI) was flat in July at a reading of 112.5 (2016=100), after increasing by 0.2% in June. The CEI grew by 0.9% in the six-month period between January and July, faster than its 0.5% growth over the previous six-month period. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—are included among the data used to determine recessions in the US. All components improved in July, except for industrial production, which experienced its largest negative contribution to the CEI since January.
• The Lagging Economic Index® (LAG) inched 0.1% lower in July to a reading of 119.6 (2016=100), partially reversing an increase of 0.2% in June. The LAG’s six-month growth rate softened to 0.6% over the six-month period ending in July, about half the 1.1% increase over the previous six-month period.

In background and analysis accompanying the report, Senior Manager, Business Cycle Indicators at the Conference Board, Justyna Zabinska-La Monica, said:

“The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead. In July, weakness was widespread among non-financial components. A sharp deterioration in new orders, persistently weak consumer expectations of business conditions, softer building permits and hours worked in manufacturing drove the decline, together with the still-negative yield spread. These data continue to suggest headwinds in economic growth going forward. The Conference Board expects US real GDP growth to slow over the next few quarters as consumers and businesses continue cutting spending and investments. US real GDP is expected to expand at a pace of 0.6% annualized in Q3 and 1% annualized in Q4.”