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U.S. Leading Economic Index Rises Less Than Expected In May


With improvements in a majority of components partly offset by declines in leading indicators of labor markets and residential construction, the Conference Board released a report on Thursday showing a smaller than expected increase by its index of leading U.S. economic indicators in the month of May.

The Conference Board said its leading economic index edged up by 0.2 percent in May after climbing by 0.4 percent in April. Economists had expected the index to rise by 0.3 percent.

"The U.S. LEI still points to solid growth but the current trend, which is moderating, indicates that economic activity is not likely to accelerate," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.

The modest increase reflected positive contributions by seven of the ten indicators that make up the leading index, including the ISM new orders index, the interest rate spread, average consumer expectations for business conditions, and stock prices.

As mentioned above, however, negative contributions from building permits, average weekly manufacturing hours and average weekly initial jobless claims limited the upside for the index.

The report said the coincident economic index also rose by 0.2 percent in May, matching the uptick seen in the previous month.

Non-farm payroll employment, personal income less transfer payments and manufacturing and trade sales made positive contributions to the index, while industrial production was the only negative contributor.

Meanwhile, the Conference Board said the lagging economic index advanced by 0.5 percent in May following a 0.4 percent increase in April.

The increase by the lagging index reflected positive contributions from the average duration of unemployment, commercial and industrial loans outstanding and the ratio of consumer installment credit outstanding to personal income.

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