US Leading Economic Index Preview
The July US Leading Economic Index(LEI) is expected to fall 0.2% following a 0.1% decrease in June and a 0.2% decrease in May. The July LEI was down 2.1% year-over-year and was down 1.7% on a 6month annualized basis. The June Coincident Index was up 0.1% in June following a 0.1% decrease in May and the June Lagging Index was down 0.3% in June following a 0.2% drop in May.
Positive contributions to the July LEI include:
• Improvement in the 10yr Treasury relative to Fed funds. The 10yr yield fell to 4.095 early in July before improving to 4.33% later in the month.
• Improved UofM Confidence data. The UofM Confidence survey bounced off an all time low in June, and though still generally negative will help boost July LEI.
Negative contributions to the July LEI include:
• Declines in equity markets. The S&P cash index was dropped nearly 5% in July.
• Higher initial jobless claims. Initial jobless claims grew to 449k during the last week of July from 348k during the first week of the month.
• Fewer building permits. July building permits fell to 937k from an upwardly revised 1.138mln in June.
Other Index components expected to have limited impact on July LEI include:
• ISM supplier deliveries which were unchanged at 55.1 in July
• Roughly unchanged factory workweek
• Nearly unchanged Consumer Goods Orders
• Nearly unchanged M2 money supply
• Slight improvement in real non-durable consumer goods orders