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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 (June 22).
CBS MarketWatch reported that 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.
It’s the first back-to-back declines in the leading index since early 2001. 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.