2010.09.2312:08:00UTC+00Leading Indicators Index Shows Moderate Increase In August

Thursday morning, the Conference Board released its report on leading economic indicators in the month of August, showing that its leading indicators index for the month increased by more than economists had been anticipating.

The report showed that the leading indicators index increased by 0.3 percent in August following a 0.1 percent increase in July. Economists had been expecting the leading index to show a more modest increase of about 0.1 percent.

Ken Goldstein, an economist at the Conference Board, said, "While the recession officially ended in June 2009, the recent pace of growth has been disappointingly slow, fueling concern that the economic recovery could fade and the U.S. could slide back into recession."

"However, latest data from the U.S. LEI suggest little change in economic conditions over the next few months," he added. "Expect more of the same - a weak economy with little forward momentum through 2010 and early 2011."

Seven of the ten indicators that make up the leading index increased in August, contributing to the bigger than expected increase by the index.

The interest rate spread, real money supply, and the average workweek made the largest positive contributions to the index, although the increase by the index was limited by negative contributions from initial unemployment claims and supplier deliveries.

The report also showed that the coincident economic index was unchanged in August after edging up by 0.1 percent in July,

"Current economic conditions, as measured by The Conference Board CEI, have been essentially flat since May, after reaching a bottom in June 2009," said Ataman Ozyildirim, an economist at the Conference Board.

Positive contributions from personal income less transfer payments, industrial production, and manufacturing and trade sales were offset by a negative contribution from non-farm payroll employees.

Meanwhile, the lagging economic index rose by 0.2 percent in August after increasing by 0.4 percent in the previous month, although only two of the seven components increased.

The increase reflected positive contributions from the average duration of unemployment and the change in unit labor costs, which offset negative contributions from commercial and industrial loans outstanding, the ratio of consumer installment credit to personal income and changes in consumer prices for services.

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