Leading Economic Indicators in U.S. Increased 0.3% in JuneJeanna Smialek
The index of U.S. leading indicators rose in June for the fifth straight month, showing the economy continues to gain momentum following a slowdown at the start of 2014.
The Conference Board’s gauge, a measure of the outlook for the next three to six months, increased 0.3 percent after a revised 0.7 percent gain in May, the New York-based group said today. The median forecast of 49 economists surveyed by Bloomberg called for a 0.5 percent advance.
Job gains and improving consumer confidence are helping to bolster demand and drive economic growth. A pickup in the housing industry, which has recently stalled, would help to spur stronger improvement.
“The economy continues to keep going better, and companies continue to do better,” John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “It’s going to be increasingly positive.”
Estimates in the Bloomberg survey ranged from gains of 0.2 percent to 0.7 percent. The May reading was initially reported as a 0.5 percent increase.
Six of the 10 indicators in the Conference Board’s leading gauge contributed to last month’s gain, led by interest-rate spreads, stock prices and new orders, today’s report showed.
The index of coincident indicators, a gauge of current economic activity, gained 0.2 percent in June after a 0.3 percent increase the prior month.
The coincident index tracks payrolls, incomes, sales and production, measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.
“The pace of economic activity continued to expand moderately,” Ken Goldstein, economist at the Conference Board, said in a statement. “Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy.”
A measure of lagging indicators increased 0.5 percent after a 0.3 percent advance in May.
Job growth shows the labor market is healing. Employers added 288,000 jobs in June and have averaged almost 231,000 jobs per month so far this year, putting the economy on pace for the best performance in 15 years.
Manufacturing is also looking stronger. The Federal Reserve Bank of Philadelphia reported this week that its factory index jumped to 23.9 in July, the highest level since March 2011. Readings greater than zero signal growth in the area of eastern Pennsylvania, southern New Jersey and Delaware.
The housing market is one area that continues to hold back the economy. New home starts fell 9.3 percent to an 893,000 annualized rate in June from a 985,000 pace in May that was weaker than initially estimated, figures from the Commerce Department showed this week. A plunge in the South swamped gains in the rest of the U.S.
Fed Chair Janet Yellen said this week during her semi-annual testimony before Congress that housing “readings this year have, overall, continued to be disappointing.”
Even so, acceleration in other parts of the economy has helped the Fed to stay the course as it slows its bond-buying program. The central bank’s policy making Federal Open Market Committee announced a fifth straight $10 billion reduction in monthly asset purchases, to $35 billion, in June.
The FOMC’s next meeting is scheduled for July 29-30.