The Conference Board Leading Economic Index for the U.S. increased 0.4 percent in May, following no change in April and a 1.4 percent rise in March. The Coincident Economic Index also posted a 0.4 percent gain, while the Lagging Economic Index (LAG) declined 0.1 percent.

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\”The index points to continued, though slower, U.S. growth for the rest of this year,\” says Bart van Ark, chief economist of The Conference Board. \”Public debt and deficits weigh heavily on growth prospects on both sides of the Atlantic. We project a serious slowdown in European growth in 2011, which could further weaken the U.S. outlook.\”

The LEI, which currently stands at 109.9 (2004=100), is 12 percent above its most recent trough of March 2009 and it is 4.6 percent above its most recent peak in December 2006. The financial components of the index made the largest positive contributions, more than offsetting negative contributions from stock prices and building permits.

The six month change in the LEI moderated to 3.9 through May (a 7.9 percent annual rate), down from 5.2 percent (a 10.6 percent annual rate) for the previous six months.

The CEI, which currently stands at 101.3 (2004=100), is 2.0 percent above its most recent trough in June 2009, but still 5.4 percent below its most recent peak of December 2007. All components made positive contributions in May. The six-month change in the coincident economic index at 1.4 percent (a 2.8 percent annual rate) through May 2010, up from 0.2 percent (a 0.4 percent annual rate) for the previous six months.

The slight decline in the lagging economic index for May increased the coincident-to-lagging ratio. Real GDP expanded at a 3.0 percent annual rate in the first quarter of 2010, following an increase of 5.6 percent annual rate in the fourth quarter of last year. The LAG now stands at 107.8 (2004=100), with two components expanding.