May Leading Economic Indicators Decline

The Conference Board, New York reported yesterday its Leading Economic Index for the U.S. declined by 0.2 percent in May to 123.7, following an 0.6 percent increase in April and an 0.1 percent increase in March.

The Coincident Economic Index was unchanged in May at 113.5, following an 0.2 percent increase in April and no change in March. The Lagging Economic Index increased by 0.3 percent in May to 121.9, following a 0.2 percent increase in April, and an 0.6 percent increase in March.

May marked the Index’s third decline in the past six months; Tim Quinlan, economist with Wells Fargo Securities, said economic growth appears to be in a pattern of “tepid” growth.

“The LEI continues to signal a fairly uninspiring outlook for growth,” Quinlan said. “Softer labor market conditions last month weighed on the LEI. Average hours worked in manufacturing was neutral, but initial claims were the largest drag on the headline.”

Ataman Ozyildirim, Director of Business Cycles and Growth Research with The Conference Board, agreed, noting the growth rate of the LEI has moderated over the past year. “While the LEI suggests the economy will continue growing at a moderate pace in the near term, volatility in financial markets and a moderating outlook in labor markets could pose downside risks to growth,” he said.