US Index Falls Much More than Expected in July

The US Conference Board Leading Index (LI) fell by -0.6%mom in Jul-24 (Jun-24: -0.2%mom), marking the 5th consecutive month of contraction and sharper than market expectations of -0.3%mom.

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US Index Falls

The decline was primarily driven by non-financial components, with consumer expectations, new orders, building permits, and average weekly hours all weighing negatively on the index, while other components showed little change.

“Among financial components, the ongoing negative interest rate continued to remain a drag on the overall LI.

“Despite this contractionary trend, the LI has not indicated a recession for the 4th consecutive month. Meanwhile, current economic conditions remained positive as the Coincident Index (CI) held steady in Jul-24, with positive contributions from most components offsetting the decline in industrial production,” says MIDF.

Looking ahead, the sustained contraction in the LI signals a softer growth outlook for the US economy in the coming months.

“On that note, in response to easing inflation and possibility of slowing growth, we foresee the Fed will likely begin to ease its policy interest rate as early as in Sep-24,” it says.