A reading on leading U.S. economic indicators fell by much more than expected in the month of July, according to a report released by the Conference Board on Monday.
The Conference Board said its leading economic index slid by 0.6 percent in July after dipping by 0.2 percent in June. Economists had expected the index to decrease by 0.3 percent.
Meanwhile, the report said the index fell by 2.1 percent over the six-month period ending in July 2024, a smaller rate of decline than the 3.1 percent slump over the six-month period between July 2023 and January 2024.
The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead, said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
In July, weakness was widespread among non-financial components, she added. A sharp deterioration in new orders, persistently weak consumer expectations of business conditions, and softer building permits and hours worked in manufacturing drove the decline, together with the still-negative yield spread.
The Conference Board also said its coincident economic index was unchanged in July after rising by 0.2 percent in June. The index grew by 0.9 percent in the six-month period between January and July of 2024, faster than its 0.5 percent growth rate over the previous six-month period.
The lagging economic index edged down by 0.1 percent in July after inching up by 0.2 percent in June. The indexs six-month growth rate softened to 0.6 percent over the six-month period ending in July 2024, about half the 1.1 percent increase over the six-month period from July 2023 to January of 2024.
These data continue to suggest headwinds in economic growth going forward, said Zabinska-La Monica. The Conference Board expects US real GDP growth to slow over the next few quarters as consumers and businesses continue cutting spending and investments.
She continued, US real GDP is expected to expand at a pace of 0.6 percent annualized in Q3 2024 and 1 percent annualized in Q4.