Leading Economic Indicators Up for Fourth Straight Month

A gauge of leading economic indicators points to a more promising second half of the year after a lackluster first half.

The Conference Board's Leading Economic Index (LEI), which tracks signs of future developments, rose 0.5 percent in May to 101.7, building on gains of 0.3 percent in April and 1.0 percent in March.

The index measures 10 major components, including average weekly initial claims for unemployment insurance, average consumer expectations for business conditions, and building permits for new private housing. Ataman Ozyildirim, an economist for the Conference Board, said May's increase—the fourth straight one—was "broad based."

"Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year," Ozyildirim said.

Both the coincident and lagging indices also improved, increasing 0.3 percent to 109.0 and 0.4 percent to 123.8, respectively.

Looking forward, Conference Board economist Ken Goldstein says data suggest the economy "is finally moving up from a 2 percent growth trend to a more robust expansion."

How much more robust is a matter of debate, however. In its latest outlook, the Federal Open Market Committee projected economic growth of 2.1–2.3 percent for the entire year, a slowdown from forecasts of up to 3.0 percent growth predicted before news of a first-quarter contraction came out.