Conference Board Leading Economic Index Sees Partial Recovery in May

The latest Conference Board Leading Economic Index (LEI) for May was up 2.8% from the April final figure of 97.1.

The Conference Board Leading Economic Index® (LEI) for theU.S. increased 2.8 percent in May to 99.8 (2016 = 100), following a 6.1 percent decline in April, and a 7.5 percent decline in March.

“In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 1.1 percent in May to 95.3 (2016 = 100), following a 10.4 percent decline in April and a 2.2 percent decline in March.

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

Conference Board's LEI

For additional perspective on this indicator, see the latest press release, which includes this overview:

NEW YORK, June 18, 2020…The Conference Board Leading Economic Index® (LEI) for the U.S. increased 2.8 percent in May to 99.8 (2016 = 100), following a 6.1 percent decline in April, and a 7.5 percent decline in March.

“In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage-off the previous peak for the index and the number of months between the previous peak and official recessions.