U.S. Leading Economic Indicators Index Declined 0.6% in May
1 Mensagem
|Página 1 de 1
U.S. Leading Economic Indicators Index Declined 0.6% in May
June 22 (Bloomberg) -- An index of U.S. leading economic indicators fell last month by the most since September, signaling the robust pace of the economy earlier this year will give way to slower growth.
The Conference Board's index declined 0.6 percent after a 0.1 percent drop in April, the New York-based group said today. The last time the gauge fell in consecutive months was February and March 2001.
Decreases in consumer sentiment, building permits and stock prices were among the indicators that fell during the month. The report is evidence that two years of interest-rate increases from the Federal Reserve are taking hold, economists said.
``The impact of a cooling housing market, higher energy costs and higher interest rates are beginning to bite economic growth,'' Lynn Reaser, chief economist for the Investment Strategies Group at Bank of America in Boston, said before the report.
Economists expected the index to decline 0.5 percent, according to the median of 53 forecasts in a Bloomberg News survey. Estimates ranged from a drop of 0.7 percent to an increase of 0.3 percent. The New York-based Conference Board's index points to the direction of the economy over the next six months.
Higher jobless claims and lower consumer expectations, which were the biggest drags on the index last month, have since reversed and may boost the June reading, economists said.
Jobless Claims
The weekly jobless claims figures from the Labor Department have receded since averaging 333,500 in May, when a temporary government shutdown in Puerto Rico closed 50 agencies and public schools. Claims subtracted 0.19 percentage point from the leading index.
Last week, 308,000 new claims were filed, up from a four- month low of 297,000 in the previous week, the Labor Department said today in Washington.
Economic growth is forecast to average about 3 percent from the second quarter through the first three months of 2007, according to a Bloomberg survey of economists taken from May 30 to June 7. The economy expanded at an annual rate of 5.3 percent in the first quarter.
``Right now, (the economy's) strong but I think there are a lot of warning sings on the horizon,'' said Gary Kelly, chief executive of Southwest Airlines Co., in an interview on June 16. ``We're worried about the same things everyone else is worried about: rising interest rates, rising energy prices and the weakening housing market.''
Federal Reserve
Central bankers have said there are some signs of a slowdown in economic growth that would help curb inflation, which may encourage them to halt the series of rate increases later this year, economists said.
``We're likely not to have growth as robust going forward,'' Fed Governor Randall Kroszner said after a speech on June 16.
Recent reports showing an acceleration in inflation will probably prompt Fed policy makers to raise their benchmark interest rate by a quarter percentage point on June 28-29, the 17th such increase.
Seven of 10 leading indicators had a negative effect on the May index, today's report showed.
Building permits, a sign of future construction, subtracted 0.06 percentage point from the index. The Commerce Department said this week that permits dropped in May to the lowest level since November 2003.
Housing Market
``The builders have known that the boom market we've been in is not going to last forever,'' Mick Pattinson, chief executive officer of Barratt American Inc., said in a June 20 interview. Carlsbad, California-based Barratt builds homes in the western U.S. ``We have cut back our building a little bit, but not tremendously.''
Pattinson said there has been an increase in order cancellations at Barratt, though ``not on a massive scale.''
High gasoline prices in addition to rising borrowing costs caused consumer confidence to decline in May. The University of Michigan's index of consumer expectations fell to 68.2 during the month, the lowest level since October.
The leading index also reflected a decline in stock prices, which subtracted 0.04 percentage point from the May figure. The Standard & Poor's Index of 500 stocks averaged 1290, down from 1302.2 a month earlier.
Seven of the index's 10 indicators are known before the report is released: jobless claims, consumer expectations, the yield curve, building permits, stock prices, supplier delivery times and factory hours. The Conference Board assumes measures for money supply adjusted for inflation, new orders for consumer goods and business equipment.
Money Supply
Money supply adjusted for inflation, the component with the greatest weighting in the leading economic indicators index, subtracted 0.14 percentage point from the gauge.
The leading index may improve this month, reflecting the drop in jobless claims and a pickup in consumer sentiment. The University of Michigan's consumer expectations index inched up to 69.2 the first half of this month as gasoline prices retreated from a seven-month high set in May.
``Next month, claims will probably be an add, and consumer expectations, if they don't add, will at least level off,'' said Glenn Haberbush, an economist at Mizuho Securities USA Inc. in New York.
The three measures that had a positive effect on the index were new orders for both consumer goods and business equipment, as well as the yield curve. Orders for equipment added 0.04 percentage point to the May leading index.
Car Sales
Carlos Ghosn, chief executive officer of Nissan Motor Co., said the auto industry's U.S. new vehicle sales are likely to be little changed even as rising energy costs slow the economy.
``We're going to be living in a stable market for a while,'' Ghosn said in an interview on June 15.
The Conference Board's index of coincident indicators, a gauge of current economic activity, rose 0.1 percent in May after rising 0.2 percent in April. The index tracks payrolls, incomes, sales and projections.
The gauge of lagging indicators rose 0.2 percent for a third month. The index measures business lending, length of unemployment, services prices and ratios of labor costs, inventories and consumer credit.
To contact the reporter on this story:
Courtney Schlisserman in Washington
cschlisserma@bloomberg.net
Last Updated: June 22, 2006 10:00 EDT
The Conference Board's index declined 0.6 percent after a 0.1 percent drop in April, the New York-based group said today. The last time the gauge fell in consecutive months was February and March 2001.
Decreases in consumer sentiment, building permits and stock prices were among the indicators that fell during the month. The report is evidence that two years of interest-rate increases from the Federal Reserve are taking hold, economists said.
``The impact of a cooling housing market, higher energy costs and higher interest rates are beginning to bite economic growth,'' Lynn Reaser, chief economist for the Investment Strategies Group at Bank of America in Boston, said before the report.
Economists expected the index to decline 0.5 percent, according to the median of 53 forecasts in a Bloomberg News survey. Estimates ranged from a drop of 0.7 percent to an increase of 0.3 percent. The New York-based Conference Board's index points to the direction of the economy over the next six months.
Higher jobless claims and lower consumer expectations, which were the biggest drags on the index last month, have since reversed and may boost the June reading, economists said.
Jobless Claims
The weekly jobless claims figures from the Labor Department have receded since averaging 333,500 in May, when a temporary government shutdown in Puerto Rico closed 50 agencies and public schools. Claims subtracted 0.19 percentage point from the leading index.
Last week, 308,000 new claims were filed, up from a four- month low of 297,000 in the previous week, the Labor Department said today in Washington.
Economic growth is forecast to average about 3 percent from the second quarter through the first three months of 2007, according to a Bloomberg survey of economists taken from May 30 to June 7. The economy expanded at an annual rate of 5.3 percent in the first quarter.
``Right now, (the economy's) strong but I think there are a lot of warning sings on the horizon,'' said Gary Kelly, chief executive of Southwest Airlines Co., in an interview on June 16. ``We're worried about the same things everyone else is worried about: rising interest rates, rising energy prices and the weakening housing market.''
Federal Reserve
Central bankers have said there are some signs of a slowdown in economic growth that would help curb inflation, which may encourage them to halt the series of rate increases later this year, economists said.
``We're likely not to have growth as robust going forward,'' Fed Governor Randall Kroszner said after a speech on June 16.
Recent reports showing an acceleration in inflation will probably prompt Fed policy makers to raise their benchmark interest rate by a quarter percentage point on June 28-29, the 17th such increase.
Seven of 10 leading indicators had a negative effect on the May index, today's report showed.
Building permits, a sign of future construction, subtracted 0.06 percentage point from the index. The Commerce Department said this week that permits dropped in May to the lowest level since November 2003.
Housing Market
``The builders have known that the boom market we've been in is not going to last forever,'' Mick Pattinson, chief executive officer of Barratt American Inc., said in a June 20 interview. Carlsbad, California-based Barratt builds homes in the western U.S. ``We have cut back our building a little bit, but not tremendously.''
Pattinson said there has been an increase in order cancellations at Barratt, though ``not on a massive scale.''
High gasoline prices in addition to rising borrowing costs caused consumer confidence to decline in May. The University of Michigan's index of consumer expectations fell to 68.2 during the month, the lowest level since October.
The leading index also reflected a decline in stock prices, which subtracted 0.04 percentage point from the May figure. The Standard & Poor's Index of 500 stocks averaged 1290, down from 1302.2 a month earlier.
Seven of the index's 10 indicators are known before the report is released: jobless claims, consumer expectations, the yield curve, building permits, stock prices, supplier delivery times and factory hours. The Conference Board assumes measures for money supply adjusted for inflation, new orders for consumer goods and business equipment.
Money Supply
Money supply adjusted for inflation, the component with the greatest weighting in the leading economic indicators index, subtracted 0.14 percentage point from the gauge.
The leading index may improve this month, reflecting the drop in jobless claims and a pickup in consumer sentiment. The University of Michigan's consumer expectations index inched up to 69.2 the first half of this month as gasoline prices retreated from a seven-month high set in May.
``Next month, claims will probably be an add, and consumer expectations, if they don't add, will at least level off,'' said Glenn Haberbush, an economist at Mizuho Securities USA Inc. in New York.
The three measures that had a positive effect on the index were new orders for both consumer goods and business equipment, as well as the yield curve. Orders for equipment added 0.04 percentage point to the May leading index.
Car Sales
Carlos Ghosn, chief executive officer of Nissan Motor Co., said the auto industry's U.S. new vehicle sales are likely to be little changed even as rising energy costs slow the economy.
``We're going to be living in a stable market for a while,'' Ghosn said in an interview on June 15.
The Conference Board's index of coincident indicators, a gauge of current economic activity, rose 0.1 percent in May after rising 0.2 percent in April. The index tracks payrolls, incomes, sales and projections.
The gauge of lagging indicators rose 0.2 percent for a third month. The index measures business lending, length of unemployment, services prices and ratios of labor costs, inventories and consumer credit.
To contact the reporter on this story:
Courtney Schlisserman in Washington
cschlisserma@bloomberg.net
Last Updated: June 22, 2006 10:00 EDT
- Mensagens: 300
- Registado: 18/5/2006 9:16
1 Mensagem
|Página 1 de 1