A key measure of turning points in the U.S. economy deteriorated for the fifth straight month in July.
The Conference Board said its index of leading economic indicators fell 0.6 percent last month. It has declined in each month since March, including a 0.2 percent drop in June.
Economists had expected just half of that decline.
The index fell for 23 straight months before briefly turning positive in February. For much of that period, the depth, duration, and breadth of the decline indicated that the U.S. was on the verge of a recession.
Begining with January’s reading, however, the index’s pace and breadth of decline emerged from the recession red zone. The latest reading indicates a slowdown but not an outright recession.
The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “In July, weakness was widespread among non-financial components. A sharp deterioration in new orders, persistently weak consumer expectations of business conditions, and softer building permits and hours worked in manufacturing drove the decline, together with the still-negative yield spread. These data continue to suggest headwinds in economic growth going forward.”
Despite widespread predictions that growth would remain sluggish this year, growth accelerated from a 1.4 percent growth rate in the first three months of this year to 2.8 percent in second quarter. The Atlanta Fed’s GDPNow indicator says that economic data released so far indicate the economy is growing at a two percent rate in the third quarter. Economists current project the economy will grow at around a 1.5 percent rate this quarter.