US leading indicators rise in May, economy to 'muddle through'

21 June 2012 21:23  [Source: ICIS news]

WASHINGTON (ICIS)--Economic data on near-term prospects for US growth edged up by 0.3% in May from April, reversing an April decline and suggesting that the nation will “muddle through” over the next six months, a key survey said on Thursday.

The Conference Board, a 95-year-old business analysis group in New York City, said its leading economic index (LEI) for May rose to 95.8.

The LEI represents a cumulative measure of ten different business and economic gauges, such as manufacturers’ new orders, residential building permits, interest rates and consumer sentiment, among others.

The current index is measured against the baseline level of 100 set in 2004, before the 2008-2009 US recession.

The 0.3% gain in May more than offset the 0.1% decline in April and served to reaffirm the 0.2% advance in March, the board said.

Board economist Ken Goldstein said data underlying the index “in general reflect a US economy that is growing modestly, neither losing nor gaining momentum”.

The US experienced GDP growth of only 1.9% in the first quarter of this year, slowing from the near-normal GDP rate of 3% in the fourth quarter of 2011.

Subsequent data on employment growth, consumer confidence, the long-depressed US housing sector and moderations in consumer spending and business investment have suggested that the US economy could be cooling further in the second quarter.

But Conference Board economist Ataman Ozyildirim noted that the leading economic index has remained “in expansionary territory and is well above its growth at the end of 2011”.

That indicates, said Ozyildirim, there is “a relatively low risk of a downturn in the second half of 2012”.

Goldstein said recent data suggest the US economy will be “more of a muddle through” rather than a strong expansion in quarters ahead.

He also cautioned that ongoing headwinds, both domestic and foreign, “make further strengthening of the economy difficult”.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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