US leading indicators rose in May but recovery slows

17 June 2010 19:04  [Source: ICIS news]

WASHINGTON (ICIS news)--The index of US leading economic indicators (LEI) rose by 0.4% in May from April, the Conference Board said on Thursday, but the pace of the nation’s recovery is expected to slow in the second half this year.

The Conference Board, a 94-year-old business analysis group based in New York City, said that with the May advance was driven by continuing low interest rates, gains in average weekly manufacturing hours, increased consumer confidence and new orders for consumer goods.

In April, the index initially showed a narrow 0.1% decline - the first downward indicator in a year - but the board said revised data disclosed that April was flat with neither a loss or gain.

The board’s index of leading indicators is a consolidated measure of 10 subsidiary data sets that also include stock prices, building permits, unemployment claims and orders for capital goods - all of which worsened in May.

The index had been on a generally upward swing for more than a year, the board noted, but its six-month growth rate has been moderating.

For example, the rate of growth for the index over the last six months has been 3.9%, the board noted.  But that rate is down from the 5.2% pace of growth that was recorded for the index in the previous six months.

“The index points to continued though slower US growth for the rest of this year,” said Bart van Ark, the board’s chief economist.

“Public debt and deficits weigh heavily on growth prospects on both sides of the Atlantic,” van Ark said, and those worries can chill consumer confidence and spending and consequently weaken the recovery.

The growing concern among US financial officials and the general public about the nation’s growing deficits and debt are aggravated by the simmering debt crisis in Europe.

“We project a serious slowdown in European growth in 2011,” van Ark said, “which could further weaken the US outlook.”

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