U.S. Leading Economic Index continues to rise in May

The U.S. Leading Economic Index continued to rise in May. The index rose 0.3 percent in the month, rising for the ninth straight month. The rise was in line with the anticipations for a continued moderate expansion.

Eight of the components contributed positively to the headline figure, while just one contributed negatively. Building permits was the only component that was a drag on the index, subtracting 0.15 percentage points from the headline figure. This is in line with housing starts data for May that showed both single-family and multifamily starts declined.

The interest rate spread component once again contributed the most to the index in May, adding 0.16 percentage points. Consumer expectations contributed an additional 0.08 percentage points – sentiment continues to optimistic.

ISM new orders added 0.08 percentage point stimulating the index, an indication that the gap between “soft” and “hard” data might be narrowing slightly, noted Wells Fargo in a research report.

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