US Leading Economic Index Declined 0.6% in July

The Conference Board U.S. Leading Economic Index (LEI) fell 0.6% in July to 100.4, following a 0.2% decline in June. Economists projected the index to fall by 0.3%. The LEI declined by 2.1% in the six months ending in July, a slower rate than the 3.1% drop seen between July 2023 and January 2024.

“The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators, at The Conference Board.

“In July, weakness was widespread among non-financial components. A sharp deterioration in new orders, persistently weak consumer expectations of business conditions and softer building permits and hours worked in manufacturing drove the decline, together with the still-negative yield spread. These data continue to suggest headwinds in economic growth going forward.”

Meanwhile, the US Coincident Economic Index (CEI) remained steady in July at 112.5, after rising 0.2% in June. The CEI increased by 0.9% between January and July, outpacing its prior six-month increase of 0.5%.

The US Lagging Economic Index (LAG) fell 0.1% in July to 119.6, partially reversing a 0.2% increase in June. The LAG’s six-month growth rate fell to 0.6% in July, compared to a 1.1% increase between July 2023 and January 2024.

These data continue to suggest headwinds in economic growth going forward,” Zabinska-La Monica added.

The Conference Board expects U.S. real GDP growth to slow over the next few quarters as consumers and businesses continue cutting spending and investments. U.S. real GDP is expected to expand at a pace of 0.6% annualized in the third quarter and 1% annualized in the fourth quarter.