The Conference Board Leading Economic Index (LEI) for the U.S., which provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term, fell by 0.2% in August to 100.2, following a decline of 0.6% in July. Over the six-month period ending in August, the LEI fell by 2.3%, a smaller rate of decline than the 2.7% drop over the six-month period between August 2023 and February 2024.
“In August, the U.S. LEI remained on a downward trajectory and posted its sixth consecutive monthly decline,” said Justyna Zabinska-La Monica, senior manager, Business Cycle Indicators, at The Conference Board. “The erosion continued to be driven by new orders, which recorded its lowest value since May 2023. A negative interest rate spread, persistently gloomy consumer expectations of future business conditions, and lower stock prices after the early-August financial market tumult also weighed on the Index.
“Overall, the LEI continued to signal headwinds to economic growth ahead,” Zabinska-La Monica continued. “The Conference Board expects U.S. real GDP growth to lose momentum in the second half of this year as higher prices, elevated interest rates and mounting debt erode domestic demand. However, in the Fed’s September 2024 Summary of Economic Projections, policymakers suggested 100 basis points of interest rate cuts are likely by the end of this year, which should lower borrowing costs and support stronger economic activity in 2025.”
The Conference Board Coincident Economic Index (CEI) for the U.S. increased by 0.3% in August to 112.7, after a downwardly revised 0.1% decline in July.
The CEI grew by 0.8% in the six-month period ending in August 2024, slightly above its 0.6% growth rate over the previous six-month period. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—are included among the data used to determine recessions in the U.S. All components improved in August, with industrial production recovering the most after July’s decline.
The 10 components of the Leading Economic Index for the U.S. are:
- Average weekly hours in manufacturing
- Average weekly initial claims for unemployment insurance
- Manufacturers’ new orders for consumer goods and materials
- ISM Index of New Orders
- Manufacturers’ new orders for nondefense capital goods excluding aircraft orders
- Building permits for new private housing units
- S&P 500 Index of Stock Prices
- Leading Credit Index
- Interest rate spread (10-year Treasury bonds less federal funds rate)
- Average consumer expectations for business conditions
