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Leading Indicators Up: A Good Sign for the Economy

July 20th, 2009 Michael McDonough
The index of leading indicators was up in June by 0.7%, or slightly above the market consensus of 0.5%. At the same time May’s number was revised up to 1.3% from 1.2%. This is the third consecutive month of gains for the index. In the release the Conference Board was quoted as saying, “The behavior of the composite indexes suggest that the recession will continue to ease and that the economy may begin to recover in the near term.” The LEI tends to be a good forward looking indicator towards industrial production and the ISM. Seven out of ten of the LEI sub-components were positive for the month with the biggest gains coming from the yield curve and building permits; while money supply was the weakest component. The Conference Board also released June’’s coincident and lagging indices, both of which were down.
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