April Leading Economic Indicators

Released: Monday, May 19, 2008

The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index remained unchanged and the lagging index increased 0.1 percent in April.
The leading index increased for the second straight month in April. Stock prices, the interest rate spread, and housing permits made large positive contributions to the index this month, more than offsetting the sharp declines in average weekly hours and consumer expectations. In April, the six-month rate of decline in the leading index slowed to -1.2 percent (a -2.3 percent annual rate), from - 2.4 percent (a -4.7 percent annual rate) from July 2007 to January 2008. In addition, the weaknesses among the leading indicators have become somewhat less widespread in the last two months.

The coincident index was unchanged again in April, and this measure of current economic activity has not increased since October 2007. Industrial production and employment decreased this month, but these declines were offset by gains in personal income less transfer payments* and real manufacturing and trade sales*. The six-month change in the coincident index continued to fall, to -0.4 percent (a -0.7 percent annual rate) in April, down from an increase of 0.3 percent (a 0.6 percent annual rate) from July 2007 to January 2008. The lagging index continued to increase this month and as a result, the coincident to lagging ratio decreased further.

After declining steadily since the middle of 2007, the leading index appears to have stabilized lately, increasing slightly in March and April. Meanwhile, the coincident index declined slightly since October 2007 and the weaknesses among its components have been widespread in recent months. During the first quarter, real GDP expanded at a 0.6 percent annual rate, the same growth rate that prevailed in the fourth quarter of 2007. The current behavior of the composite indexes so far still suggests that economic activity is likely to remain weak in the near term.