Economy loses steam

September 23, 2004

Conference Board's leading index falls for third consecutive month


Inman News

The Conference Board today announced that the U.S. leading index declined for the third consecutive month in August, falling 0.3 percent from July.

The leading index now stands at 115.7 (1996=100). Based on revised data, this index decreased 0.3 percent in August and decreased 0.3 percent in July. During the six-month span through August, the leading index increased 0.7 percent, with six out of 10 components advancing (diffusion index, six-month span equals 60 percent).

The weakness in the leading index during the last three months has become more widespread. Its current growth rate has slowed into the range of 1 percent to 2 percent (annual rate). However, these declines have not been long enough or deep enough to signal an end to the upward trend in the leading index underway since March 2003.

At the same time, real GDP growth slowed to a 2.8 percent annual rate in the second quarter of 2004, down from a 5 percent average rate over the preceding four quarters.

Three of the 10 indicators that make up the leading index increased in August. The positive contributors – beginning with the largest positive contributor – were manufacturers' new orders for consumer goods and materials, real money supply, and average weekly initial claims for unemployment insurance (inverted). The negative contributors – beginning with the largest negative contributor – were interest-rate spread, building permits, index of consumer expectations, manufacturers' new orders for nondefense capital goods, vendor performance, and stock prices.

The Conference Board is a nonprofit research and business group.

Copyright 2004 Inman News


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