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Conference Board Leading Economic Index Increases in June

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.3 percent in June to 102.2, following a 0.7 percent increase in May, and a 0.3 percent increase in April. The Conference Board Coincident Economic Index (CEI) increased 0.2 percent, and the Conference Board Lagging Economic Index (LAG) increased 0.5 percent.

“Broad-based increases in the LEI over the last six months signal an economy that is expanding in the near term and may even somewhat accelerate in the second half,” said Ataman Ozyildirim, economist at The Conference Board. “Housing permits, the weakest indicator during this period, reflects some risk to this improving outlook. But favorable financial conditions, generally positive trends in the labor markets and the outlook for new orders in manufacturing have offset the housing market weakness over the past six months.”

Positive contributions to the LEI from the financial and new orders components more than offset declines in building permits and the labor market indicators. In the first half of this year, the leading economic index increased 2.7 percent (about a 5.5 percent annual rate), slower than the growth of 3.5 percent (about a 7.2 percent annual rate) during the second half of 2013. In addition, the strengths among the leading indicators continue to be more widespread than the weaknesses.

The CEI, a measure of current economic activity, rose to 109.2 in June. The index rose 1.3 percent (about a 2.6 percent annual rate) between December 2013 and June 2014, slightly faster than the growth of 1 percent (about a 2.1 percent annual rate) for the previous six months. The strengths among the coincident indicators have remained very widespread, with all components advancing over the past six months. The lagging economic index, which now stands at 124.4, continued to increase, but at a higher rate than the CEI. As a result, the coincident-to-lagging ratio has declined.

“The CEI shows the pace of economic activity continued to expand moderately through June,” said Ken Goldstein, economist at The Conference Board. “Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy. In addition to a stronger housing market, more business investment could also provide an upside to the overall economy.”

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