Leading Economic Indicators Show 4th Consecutive Monthly Increment, Philly Fed Survey Surprises to the Upside

July’s leading economic indicators index rose 0.6%, experiencing its fourth consecutive month of gains. The Bloomberg consensus forecast was for an increment of +0.7%.  Rate spread, claims, and manufacturing hours all made positive contributions, while consumer expectations, M2, and permits were the biggest negative contributors.  The LEI tends to be a good forward looking indicator toward factory orders, industrial production, and the ISM.

The Philly Fed Manufacturing Index released at the same time, unexpectedly rose into positive territory with a reading of +4.2, compared to a consensus forecast of -1.0 and a previous reading of -7.5. The prices paid index increase to 10.0 from -3.5,the new orders index rose to 4.2 from -2.2, while the employment index declined to -12.9 from -25.3. The manufacturing sector as measured by the NY and Philly Fed appears to have bottomed on marginal economic improvements around the globe, and should continue to experience modest gains over the near-term as depleted inventories are replenished.