A measure of future U.S. economic activity fell for the sixth consecutive month in May, signaling potential challenges ahead, according to the Conference Board. The decline was driven by factors such as consumer pessimism, weak new orders for manufactured goods, an increase in jobless benefits claims, and a drop in building permit applications. The Leading Economic Index decreased by 0.1% to 99.0 last month, following a downwardly revised 1.4% drop in April, which marked the largest decline since the early months of the COVID-19 pandemic in 2020. This matched economists’ expectations in a Reuters poll.
Justyna Zabinska-La Monica, the Conference Board’s senior manager for business cycle indicators, noted that a rebound in stock prices during May, following temporary rollbacks of tariffs, provided some positive contribution to the index. However, this was offset by other negative factors. She explained that the six-month growth rate of the index has turned more negative, triggering a recession signal. Despite this, the Conference Board does not predict an imminent recession but anticipates a significant slowdown in economic growth in 2025 compared to 2024, with real GDP expected to grow at 1.6% this year. Persistent tariff effects could further slow growth in 2026.
— news from Reuters
— News Original —
US leading indicators slip in May, triggering recession signal, Conference Board says
June 20 (Reuters) – A measure of future U.S. economic activity fell in May for the sixth straight month and triggered a recession signal, held down by consumer pessimism, weak new orders for manufactured goods, an uptick in jobless benefits claims and a drop in building permit applications.
The Conference Board ‘s Leading Economic Index fell by 0.1% to 99.0 last month after a downwardly revised 1.4% drop in April, which was the largest decline in the index since the spring of 2020 at the start of the COVID-19 pandemic. The decline matched the consensus expectation among economists polled by Reuters.
Sign up here.
A rebound in stock prices in May following a series of temporary roll backs in President Donald Trump ‘s wave of tariffs was the main positive contributor to the index, the Conference Board ‘s senior manager for business cycle indicators, Justyna Zabinska-La Monica, said in a statement. But that was slightly outweighed by those other factors.
“With the substantial negatively revised drop in April and the further downtick in May, the six-month growth rate of the Index has become more negative, triggering the recession signal,” she said.
“The Conference Board does not anticipate recession, but we do expect a significant slowdown in economic growth in 2025 compared to 2024, with real GDP growing at 1.6% this year and persistent tariff effects potentially leading to further deceleration in 2026.”
The Leading Index had signaled a recession a few years ago during the peak of the inflation wave that followed the pandemic, but the economy never slid into contraction.