U.S. Leading Economic Index likely to have risen further in June

The Leading Economic Index of U.S. had risen for the ninth straight time in May. The interest rate spread, ISM new orders and consumer expectations all aided in driving the index higher. Building permits were the only exception, being a drag on this indicator of future economic activity. Another strong monthly gain aided in pushing the six-month annualized change to a two-year high.

The Leading Economic Index is an important input to the preferred recession forecasting model that produces the likelihood of a recession in the next six months. The recent run of strong readings from the LEI has pushed the likelihood of a recession in the next six months down to very low levels. The Leading Economic Index is expected to have risen further in June, noted Wells Fargo in a research report. If realised, this will produce a model result that implies the likelihood of a recession in the second half of this year remains low, added Wells Fargo.

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