Leading indicators fall 0.6% in May Index suggests "slow to moderate' growth, Conference Board says E-mail | Print | | Disable live quotes By Rex Nutting, MarketWatch Last Update: 10:16 AM ET Jun 22, 2006
WASHINGTON (MarketWatch) -- U.S. leading economic indicators fell 0.6% in May, suggesting that the economy is likely to grow at a "slow to moderate' pace in the near term, the Conference Board said Thursday. Economists were expecting the index to decline 0.4%, according to a survey conducted by MarketWatch. See Economic Calendar. The leading index fell 0.1% in April, and has fallen in three of the past four months. It's down 0.2% over the past six months, with half of the 10 indicators showing weakness. The index is designed to help forecast turning points in the economy six to nine months ahead. "The current behavior of the leading index so far suggests that the rapid pace of economic activity in the first quarter is unlikely to be sustained and economic growth should continue, but at a slow to moderate rate in the near term," the Conference Board said. The cumulative impact of higher energy prices, a slowing housing market, higher interest rates, lower confidence and even higher taxes in some regions have combined to slow the economy, said Ken Goldstein, labor economist at the private research institution. "Given the slower pace, the economy has less ability to absorb another round of strong hurricanes this summer." Seven of 10 leading indicators were negative in May, the board said. The biggest negative contributors were weekly jobless claims, consumer expectations and money supply. Other negatives were factory work hours, building permits, stock prices and vendor performance. Jobless claims were skewed much lower in May by a partial government shutdown in Puerto Rico. Three indicators were positive: core capital goods orders, consumer goods orders and the interest rate spread. In May, the coincident index rose 0.1%. The lagging index rose 0.2%. Some of the biggest negatives in May have improved in June. Consumer expectations rose slightly in the preliminary University of Michigan survey for June. Jobless claims have also been lower (and therefore a positive contributor) so far in June, despite an increase in the most recent week to 308,000. See full story.
