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LEI retreats in June
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August 4, 1998: 11:03 a.m. ET
Decline seen as cost of fallout from GM strike; economist calls drop a "pause"
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NEW YORK (CNNfn) - The index of Leading Economic Indicators, a statistical weather vane indicating future trends in the U.S. economy, declined in June, dragged down by rising joblessness stemming from the General Motors strike, the Conference Board said Tuesday.
The LEI figure for June - comprised of 11 components ranging from average length of workweek to total money supply - fell 0.2 percent on a seasonally adjusted basis from a revised May drop of 0.1 percent. The number matched Wall Street expectations.
The May to June drop marked the first two-month decline since early 1995, the Board said. Five of the 10 indicators fell in June, the Board reported.
Of the remainder, only one - money supply - rose, climbing by 0.8 percent after May's 0.1 percent jump. The four other non-declining indexes - average workweek, slower deliveries, capital goods orders and stock prices - remained unchanged from May.
Delos Smith, an economist with the Conference Board, played down the significance of the decline, saying it merely reflected a temporary pause in the growth curve after an overstated first quarter.
Smith predicted the index would rebound in July, once inventory problems are worked through and the GM strike has receded on the economic horizon.
Bond markets, already preoccupied with volatility in Asian currency markets, reacted blithely to the figures. The 30-year long term Treasury bond retreated 7/32 in price, ratcheting the yield up to 5.67 percent.
"The rise of unemployment claims in June, largely due to a fallout of the since-settled General Motors strike, drove most of the decline in the leading index," said Michael Boldin, director of business cycle research at the Conference Board.
The index for lagging economic indicators, a seven-part measure of recent activity in the U.S. economy, rose 0.6 percent in June to 106.5, following a May rise of 0.1 percent. The coincident indicator, which mirrors current trends in the economy, grew 0.1 percent to 120.4, down from May's 0.2 percent rise.
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The Conference Board
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