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First Cut: May Leading Economic Index responds to lower jobless claims

The Conference Board’s The Conference Board’s Leading Economic Index for May was up 2.8% from the prior month to 99.8 from 97.1 (previously 98.8). The increase reflected positive contributions from 7 components that were partially offset by 3 negative contributions.

The largest positive contribution was from average weekly jobless claims which were substantially fewer than in April, but still in the millions. The second largest positive contributor was an increase in the average workweek as limited production came back on line with lifting of some social distancing requirements. There was also a modest rebound in building permits issued as consumers responded to falling mortgage rates and the more ability to shop for homes in person. The largest negative was in the ISM new orders index which was consistent with the shutdowns in nonessential activity.

All told, this is another good headline that has to be taken with a grain of salt. Activity is picking up from very low levels and considerable risks remain for the economic outlook.

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