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First Cut: Leading Economic Index declines in June due to some likely one-offs

The Conference Board’s Leading Economic Index declined 0.3% in June to 111.5 after being unchanged at 111.8 in May. The index was dragged down by slow building permits, new manufacturing orders, and initial jobless claims.  All of these are likely to show a reversal in July. Claims have since shown every sign of returning to a low trend, soft permits in June were on the volatile multi-unit sector and should recover in July, and manufacturing orders have been weak on aircraft which may do better in July when some pending contracts are signed.

In fact, six of the 10 components were positives in June, if not enough to overtake the four negatives. The largest positive contribution was from The Conference Board’s Leading Credit Index, followed by a longer production workweek, and consumer expectations.

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