U.S. Leading Economic Index Declined Again in July

NEW YORK (August 17) An economic index that measures U.S. business cycles fell again in July, marking the 16th consecutive month of declines, indicating a continued uncertain economic outlook.

The Conference Board said Thursday its Leading Economic Index tumbled 0.4% to 105.8 in July after declining 0.7% in June, showing that its underlying components weakened.

The reading matched expectations of a consensus of economists polled by The Wall Street Journal.

The index suggests that economic activity is likely to decelerate and fall into mild contraction in the months ahead, according to Justyna Zabinska-La Monica, senior manager, Business Cycle Indicators, at The Conference Board.

"In July, weak new orders, high interest rates, a dip in consumer perceptions of the outlook for business conditions, and decreasing hours worked in manufacturing fueled the leading indicator's 0.4% decline," she said.

The nonprofit business organization now forecasts a short and shallow recession in the period of the fourth quarter of 2023 to the first of 2024, Zabinska-La Monica added.

However, The Conference Board's Coincident Economic Index--a measure of current economic activity-improved by 0.4% in July to 110.5. The Lagging Economic Index was unchanged for the second month in a row, at 118.3, it said.

The Leading Economic Index is a predictive variable that anticipates turning points in the business cycle by around seven months. The indicator is based on 10 components, among them initial claims for unemployment insurance, manufacturers' new orders, building permits of new private housing units, stock prices, and consumers expectations. It is intended to signal swings in the business cycle.

MarketWatch