By Xavier Fontdegloria
An economic index that measures U.S. business cycles rose in May, signaling that economic growth remains robust, data from The Conference Board showed Thursday.
The Leading Economic index was 114.5 in May, up 1.3% compared with April. The rise is in line with expectations from economists polled by The Wall Street Journal.
In April, the index climbed by a downwardly revised 1.3% compared with March.
The indicator currently stands above its previous peak reached in January 2020, signaling that strong economic growth will continue in the near term, Conference Board Senior Director of Economic Research Ataman Ozyildirim said.
The Conference Board forecasts U.S. gross domestic product to grow 9% in the second quarter at an annualized rate, and by 6.6% year-over-year in 2021, he said.
The Conference Board Leading Economic Index is based on 10 components, among them initial claims for unemployment insurance, manufacturers’ new orders, building permits of new private housing units, stock prices and consumers expectations. It is intended to signal swings in the business cycle and to smooth out some of the volatility of individual indicators.
Strengths among the leading indicators were widespread in May, with initial claims for unemployment insurance making the largest positive contribution to the index and housing permits making the only negative contribution, Mr. Ozyildirim said.
The Coincident Economic Index rose 0.4% in May to 105.1, while the Lagging Economic Index decreased 2.2% to 103.0, The Conference Board’s report showed.
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