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Economic Index Falls Again in June


The U.S. Leading Economic Index, an important measure of business cycles, recorded another decline in June, marking the 15th consecutive month of decreases. According to The Conference Board, the index slipped 0.7% to 106.1 in June, following a 0.6% decrease in May. This decline indicates a deterioration in the underlying components of the index.

Economists surveyed by The Wall Street Journal had expected the index to fall by 0.6%, which suggests that the economic outlook is worse than previously anticipated.

Justyna Zabinska-La Monica, The Conference Board’s senior manager of business cycle indicators, stated that this prolonged decline is now the longest streak of consecutive decreases since 2007-08 during the housing-driven economic slowdown. She attributes the decline to several factors, including gloomier consumer expectations, weaker new orders, increased unemployment claims, and reduced housing construction. Zabinska-La Monica further predicts that economic activity will likely continue to decelerate in the coming months.

The Leading Economic Index acts as a predictive variable that forecasts turning points in the business cycle approximately seven months in advance. It is comprised of ten components, such as initial claims for unemployment insurance, manufacturers’ new orders, building permits for new private housing units, stock prices, and consumer expectations. Its purpose is to provide signals about fluctuations in the business cycle.

On the other hand, The Conference Board reported that the Coincident Economic Index, which measures current economic activity, remained relatively stable at 110.0 in June. Similarly, the Lagging Economic Index maintained its position at 118.4.

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