Leading Indicators Jump by 0.4% in July

The Conference Board, New York, said its Leading Economic Index for the U.S. increased by 0.4 percent in July to 124.3, following an 0.3 percent increase in June and an 0.2 percent decline in May.

The Coincident Economic Index increased by 0.4 percent in July to 113.9, following an 0.2 percent increase in June and an 0.1 percent decline in May. The Lagging Economic Index increased by 0.1 percent in July to 121.8, following an 0.1 percent decline in June and an 0.4 percent increase in May.

Ataman Ozyildirim, Director of Business Cycles and Growth Research with The Conference Board, said the July pickup suggests moderate economic growth should continue through the end of the year. “There may even be some moderate upside growth potential if recent improvements in manufacturing and construction are sustained, and average consumer expectations don’t deteriorate further, he said.

Tim Quinlan, economist with Wells Fargo Securities, said the yield curve is still a driver of growth in this index, “but lower Treasury yields mean the boost is smaller. Fortunately, other components are stepping up,” he said. It is clear that the spread between the 10-year Treasury and the fed funds rate has been far-and-away the steadiest driver of growth.”

Quinlan also noted the firming labor market was also represented by a dip in jobless claims, which also added to the headline. “The labor market improvement is not yet feeding through to consumer confidence which remained a drag on the LEI,” he said.