An indicator of future U.S. economic activity hinted at slower growth ahead.

The U.S. leading index decreased 0.1%, the coincident index increased 0.2% and the lagging index decreased 0.1% in July, the U.S. Conference Board announced today.
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The leading index decreased slightly in July. From January to July, the leading index fell by 0.7% (a -1.4% annual rate), but it is still 0.9% above its July 2005 level. Declining housing permits continued to be the largest negative contributor.

The coincident index increased again in July. This measure of current economic activity has been increasing steadily since September 2005, but its growth moderated slightly in the second quarter of 2006 and in July. From January to July, the coincident index grew 1.1% (a 2.1% annual rate), and employment and industrial production continued to be the major contributors to this growth.

The leading index has decreased in four of the last six months and the leading index has fallen below its most recent high reached in January. At the same time, real GDP grew at a 2.5% annual rate in the second quarter, following a 5.6% gain in the first quarter. The behavior of the leading index so far suggests that slow to moderate economic growth should continue in the second half of the year.

Five of the 10 indicators that make up the leading index increased in July. The leading index now stands at 138.1 (1996=100). Based on revised data, this index increased 0.1% in June and decreased 0.5% in May.

All four indicators that make up the coincident index increased in July. The coincident index now stands at 123.1 (1996=100). This index increased 0.2% in June and increased 0.1% in May. During the six-month period through July, the coincident index increased 1.1%.

The lagging index now stands at 123.7 (1996=100) in July, with one of the seven components advancing. The positive contributor to the index was the average prime rate charged by banks.. Based on revised data, the lagging index increased 0.5% in June and increased 0.3% in May.