The Conference Board’s Leading Economic Index was up 0.4% for April and March was revised higher to 0.4% from 0.3%.  April’s increase was broad based, as 8 out of 10 indicators contributed to the move.  Building permits and stock prices were the two component indicators that did not contribute.  As we mentioned in yesterday’s Afternoon Note, building permits may have been negatively affected by weather.  Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board, commented, “In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved.”  He further commented, “April’s increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018. However, the LEI’s six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate.”

Breakdown of the 10 components:

• Manufacturing Workweek increased 0.13%
• Non-defense Capital Goods Orders, ex aircraft, rose 0.02%
• Initial Claims rose .10%
• Consumer Goods Orders increased 0.01%
• ISM New Orders were up 0.12%
• Leading Credit Index rose 0.02%
• Interest Rate Spread rose 0.13%
• Consumer Expectations rose 0.09%
• Stock Prices declined 0.07%
• Building Permits declined 0.05%

Manufacturing

Manufacturing in the Philadelphia Fed’s region accelerated at a rapid pace in May according to today’s release of the Philadelphia Fed Index.  The index increased to 34.4 from 23.2 in April.  Growth in new orders was a key driver behind the report.  

•  New Orders Index rose to 40.6 from 18.4
• The Unfilled Orders Index popped to 15.3 from 7.8 
• The Number of Employees Index increased to 30.2 from 27.1    
• Prices Received Index increased to 35.4 from 28.4
• The Prices Paid Index declined to 52.6 from 56.4 

Manufacturers benefited from higher prices received, while input prices declined. 

Employment

Initial claims increased 11,000 to 222,000 for the week ended May 11.  A better gauge, the 4-week moving average, decreased by 2,750 to 213,250, which is the lowest level since the week ended December 13, 1969.  Continuing claims decreased by 87,000 to 1.707 million, which is the lowest level since December 1, 1973.  The 4-week moving average decreased by 39,750 to 1.774 million. 

The report points to continued strength in employment.  The markets are treading water.