US Leading Economic Index® Declined Further in May, The Conference Board Reports

The Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released Thursday (6-22-23) the Leading Economic Index® (LEI) for the US in May. According to the report, the LEI declined 0.7% in May to a reading of 106.7 (2016=100), after posting declines of 0.6% in April and 1.2% in March. The LEI has dropped 4.3% over the six-month period from November 2022 to May—a much steeper rate of decline than its 3.8% contraction over the previous six-month period.

The Conference Board Coincident Economic Index® (CEI) increased by 0.2% in May to a reading of 110.2 (2016=100), after an increase of 0.3% in April and 0.2% in March. The CEI has increased by 0.8% over the six-month period from November 2022 to May—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. While recent data for industrial production have contributed negatively to coincident index, sales, employment, and income growth remain positive.

The Conference Board Lagging Economic Index® (LAG) increased by 0.1% in May to a reading of 118.4 (2016=100), after declining 0.1% in April and remaining unchanged in March. The LAG has increased by 0.6% over the six-month period from November 2022 to May—substantially less than the growth rate of 3.3% over the previous six-month period.

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

“The US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM® New Orders Index, a negative yield spread, and worsening credit conditions. The US Leading Index has declined in each of the last fourteen months and continues to point to weaker economic activity ahead. Rising interest rates paired with persistent inflation will continue to further dampen economic activity. While we revised our Q2 GDP forecast from negative to slight growth, we project that the US economy will contract over the 2023Q3 to 2024Q1 period. The recession likely will be due to continued tightness in monetary policy and lower government spending.”