June Leading Economic Index Preview
The June US Leading Economic Index is expected to fall 0.1% in June after gaining 0.1% in May. The Leading Index in May was down 1.8% on a y-o-y basis and down 1.4% on an annualized basis. The Coincident Index grew 0.1% in May after falling 0.1% in April and the Lagging Index gained 0.2% in May following a flat reading in April.
A roughly balanced mix of positive and negative factors are expected to produce a muted index reading for a 4th consecutive month but is still expected to reveal its first decline since February. However, the eye-popping and somewhat conspicuous increase in June permits poses upside risk to the June index.
Improvements are expected in the following index components:
* Building permits will provide the most support for the index after gaining 11.6% in June;
* The increase in the spread between the 10yr and the 2% Fed funds rate over the period;
* The increase in the ISM June Deliveries Index from 53.7 to 55.1.
Declines are expected in the following components:
* Steep declines in the real M2 money supply (physical currency, bank deposits under 100k);
* Declines in the S&P 500 index;
* Increase in jobless claims;
* Decrease in average weekly manufacturing hours;
* Further declines in UofM Consumer Confidence;
* Marginal declines in consumer goods orders and non-durable consumer goods orders