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US: Leading indicators stay weak

Tue, Jul 22 2008, 07:24 GMT
by KBC Market Research Desk

KBC Bank


The Chicago National Activity Indicator, a kind of leading indicator, improved in June to -0.90 from a revised -1.06 in May, earlier reported as -0.96. The 3-month moving average, a more stable gauge of activity, improved to -0.93 from -1.08 in May. According to the Chicago Fed methodology, a result below -0.70 indicates a 70% chance that a recession has started. The improvement is good news and was driven by the industrial sector, but other groups of sub-indices showed some improvement too. However, it is too early to draw conclusions from this monthly improvement, also because the index is still well below -0.70 and monthly revisions are manifold.

The leading indicator fell, as expected, by 0.1% M/M in June, following a downwardly revised 0.2% M/M drop in May, earlier reported as up 0.1% M/M. The index has now fallen seven times in the last nine months, as the index resumed its downtrend following some stabilization in March/April. On a yearly basis, the index is down 1.2%, the lowest this cycle, but unchanged from May. The 6-month annualized average, while still firmly negative, shows a distinct moderation since the end of Q1. The leading indicators, as well as the Chicago Nat. Activity Indicator, point to ongoing very weak activity and gives little signs of near term improvement.

Published on  Tue, Jul 22 2008, 07:26 GMT

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