The index of U.S. leading economic indicators climbed more than forecast in May, showing growth will pick up in the second half of the year.
The 0.7 percent increase in the Conference Board’s index, a measure of the outlook for the next three to six months, matched the April advance, the New York-based group said Thursday. The median forecast of economists in a Bloomberg survey called for a 0.4 percent gain. The back-to-back rise was the strongest since the middle of 2014.
The measure corroborates other data showing the economy is healing after backsliding in the first quarter. Faster job gains and signs of a pickup in wages will help provide additional fuel for the world’s largest economy.
The LEI is “confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” Ataman Ozyildirim, an economist at the Conference Board, said in a statement. “While residential construction and consumer expectations support the more positive outlook, industrial production and new orders in manufacturing are painting a somewhat more mixed picture.”
Other reports Thursday showed the cost of living excluding food and fuel rose less than forecast in May and fewer Americans than forecast filed for unemployment benefits last week.
The so-called core price measure increased 0.1 percent, the smallest gain this year, after climbing 0.3 percent in April, the Labor Department said. The overall consumer-price index advanced 0.4 percent, as fuel costs rebounded.
Initial jobless claims dropped by 12,000 last week to 267,000, the agency also said.
Estimates in the Bloomberg survey of 44 economists for the LEI gauge ranged from increases of 0.2 percent to 0.8 percent. Nine of the 10 indicators in the Conference Board’s measure contributed to the May increase, led by a pickup in building permits and cheap borrowing costs.
The group’s index of coincident indicators, which tracks current economic activity, rose 0.1 percent in May. The gauge measures payrolls, incomes, sales and production. The index of lagging indicators climbed 0.2 percent.
Stronger hiring and further evidence of an increase in wages are helping to sustain household confidence as the U.S. rebounds from an early-year lull in growth.
At the same time, consumer spending has been slow to catch up, and factories also are still hobbled by a stronger dollar that’s limiting sales to overseas customers.
Economists are betting on a rebound this quarter after gross domestic product contracted 0.7 percent in the first three months of the year. Growth will pick up to a 2.5 percent annualized rate in the second quarter, according to the median in a Bloomberg survey conducted June 5-10.