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Leading economic indicators in the United States experienced a sharp increase in July, signaling what analysts hope will be a stronger second half of 2014.
The Conference Board's Leading Economic Index (LEI) rose 0.9 percent last month to 103.3, building on improvements of 0.6 percent in both May and June.
The index provides a rough outlook for future economic developments, measuring indicators such as initial unemployment claims, average consumer expectations for business conditions, and permits for new homebuilding—the last of which was key in July's improvement, said Ataman Ozyildirim, economist for the Conference Board.
"Although housing has been one of the weakest components this year, the sharp gain in building permits helped boost the LEI in July," Ozyildirim said. "Financial markets and labor market conditions have also supported recent gains, but business spending indicators remain soft and their contribution marginal."
The Commerce Department reported earlier this week that new building permits last month came to a seasonally adjusted annual pace of 1.05 million, an 8.1 percent improvement over June. Most of that came from a surge in multifamily permit issuance, however, leaving the single-family housing market looking dry in the months ahead.
Looking at all the indicators taken together, Conference Board economist Ken Goldstein said economic activity "remained reasonably strong" in July.
"July's increase in the LEI, coupled with its accelerating growth trend, points to stronger economic growth over the coming months," Goldstein said.
Meanwhile, the groups Coincident Economic Index, which measures current economic activity based on payrolls and other measures, slowed somewhat, nudging up 0.2 percent to 109.6 following June's 0.3 percent gain.
The lagging index also slowed, posting a 0.2 percent increase to 124.6 after a 0.5 percent improvement in June.
