Thursday, July 22, 2010

LEIs decrease

From the Conference Board:

“The indicators point to slower growth through the fall,” says Ken Goldstein, economist at The Conference Board. “Two trends will have a direct impact on the pace of economic expansion. First, improvement in the industrial core of the economy will moderate as inventory rebuilding slows. Second, improvement in the service sector has been relatively slow, with little indication that it will pick up momentum.”

“The LEI decreased in two of the last three months, but its level is still about 4.5 percent above its previous peak before the recession began,” says Ataman Ozyildirim, economist at The Conference Board. “Moreover, the gains among the LEI components have been widespread, with the exception of housing permits and stock prices, pointing to an expanding economy, but at a slower pace in the second half of the year.”

Let's look at the data:

The chart clearly shows a slowing of the trend, but there is no sign of an imminent death spiral.

Note the primary reasons for the drop was a decrease in the workweek and supplier deliveries.