Conference Board Leading Economic Index: Continued Growth in June, All-Time High
The Latest Conference Board Leading Economic Index (LEI) for June increased to 127.8 from 127.0 in May and is currently at an all-time high. The 0.6 percent month-over-month gain was better than the 0.4% increase forecast by Briefing.com.
The Conference Board LEI for the U.S. increased again in June, driven by positive contributions from the majority of its components, especially building permits which finally improved after several months of weakness. In the first half of this year, the leading economic index increased 2.5 percent (about a 5.0 percent annual rate), faster than the growth of 1.5 percent (about a 3.0 percent annual rate) during the second half of 2016. In addition, the strengths among the leading indicators have remained widespread. [Full notes in PDF]
Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.
For additional perspective on this indicator, see the latest press release, which includes this overview:
“The U.S. LEI rose sharply in June, pointing to continued growth in the U.S. economy and perhaps even a moderate improvement in GDP growth in the second half of the year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The broad-based gain in the U.S. LEI was led by a large contribution from housing permits, which improved after several months of weakness.”
For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage-off the previous peak for the index and the number of months between the previous peak and official recessions.