2010.08.1912:46:00UTC+00Leading Indicators Index Shows Modest Increase In July

After reporting a decrease in leading economic indicators for June, the Conference Board released a report Thursday morning showing a modest increase in its leading indicators index for July. However, the index increased by less than economists had expected.

The report showed that the leading indicators index edged up by 0.1 percent in July following a revised 0.3 percent decrease in June. Economists had expected the index to increase by 0.2 percent compared to the 0.2 percent drop originally reported for the previous month.

Ken Goldstein, economist at the Conference Board, said, "The indicators point to a slow expansion through the end of the year."

The modest increase by the leading index reflected positive contributions from five of the ten indicators that make up the index, including the interest rate spread, average weekly manufacturing hours, and supplied deliveries.

On the other hand, negative contributions from the index of consumer expectations, building permits, and real money supply helped to limit the upside for the index.

The report also showed that the coincident economic index rose by 0.2 percent in July following a 0.1 percent decrease in June.

Three of the four indicators that make up the coincident index increased in July, with industrial production, personal income less transfer payments, and manufacturing and trade sales contributing positively to the index. The negative contributor was non-farm payroll employment.

Additionally, the Conference Board said that the lagging economic index increased by 0.4 percent in July after edging up by 0.1 percent increase in June.

Positive contributions from the change in consumer prices for services, the average duration of unemployment, and the change in unit labor costs led to the increase by the lagging index.

Nicholas Tenev, an economist at Barclays Capital, said, "The pace of leading indicator improvement has clearly slowed since March, as the recovery has transitioned from strong rebound to more measured growth."

"Nevertheless, annualized 3-month percent change is still at a healthy 1.1 percent, suggesting that the recent slowdown in overall activity is not indicative of a double-dip," he added.

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