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Economic Data (USA)

Thursday, June 18, 2020

Leading Economic Index for May 2020

The Conference Board® released its Leading Economic Index® (LEI) for May 2020 this morning:


Index for May 2020: 99.8 (The baseline 100 score is associated with 2016 data.)


Predicted: +2.0%
  • Actual: +2.781% (+2.7 points)


  • LEI for April 2020: 97.1
  • LEI for March 2020: 103.4

  • LEI for February 2020: 111.8
  • LEI for January 2020: 112.0

  • LEI for December 2019: 111.4

  • LEI for November 2019: 111.6

  • LEI for October 2019: 111.4

  • LEI for September 2019: 111.6


The yellow-highlighted percentage is the month-to-month change for the index.  The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

The LEI is a composite of 10 of the nation's economic data releases that's put together by The Conference Board. Statistically, the components listed below have shown a significant increase or decrease before national economic upturns or downturns:

  1. The Standard + Poor's 500 Index

  2. Average weekly claims for unemployment insurance

  3. Building permits for new private housing

  4. The interest rate spread between the yield on the benchmark 10-Year Treasury Note and Federal Funds

  5. ISM® Index of New Orders

  6. Manufacturer's new orders for consumer goods or materials

  7. Manufacturers' new orders, nondefense capital goods excluding aircraft orders

  8. Average weekly manufacturing hours

  9. Average consumer expectations for business conditions

  10. Leading Credit Index™


Chart: Leading Economic Index - May 2020 Update
Chart: Leading Economic Index - May 2020 Update


Chart: Leading Economic Index - Six-Month Growth - May 2020 Update
Chart: Leading Economic Index - Six-Month Growth
May 2020 Update
From Today's Report:

"...Initial shock to the economy may be behind us, but recovery path remains highly uncertain..."

"...'In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,' said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. 'The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.'..."

"...May’s job report was much more positive than expectations. Employment increased by 2.5 million, and the unemployment rate dropped to 13.3 percent from 14.7 in April. The unemployment rate does not fully reflect the size of the labor market slack, as many workers experienced a significant cut in weekly hours, and many of those who lost jobs have left the labor market all together.

The increase in the number of jobs simply reflects the opening of the economies in many states. Just to put things in perspective, the number of jobs in the US is still almost 20 million below the February level.

The increase in employment was across most industries, with the most notable exception being the government. The number of jobs in government dropped by 585,000 in May after a 963,000 drop in April. The decline in tax revenue in state and local governments is forcing them to shed workers.

The number of jobs is likely to sharply grow further in the next 2-3 months as states continue to relax social distancing restrictions. The big question is how willing consumers will be to spend on consumption categories that pose a contagion risk. They will probably spend less on categories that both pose a high contagion risk and could more easily be avoided for a while, such as entertainment and flights. A full recovery in employment is unlikely to occur in the next 12 months..."



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