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News > Economy
U.S. leading indicators up
June 20, 2001: 10:33 a.m. ET

Conference Board report on economic strength is better than expected
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NEW YORK (CNNfn) - A key gauge meant to predict the U.S. economy's performance rose in May, a report said Wednesday, hinting that the slowdown in the world's largest economy could nearly be over.

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  The latest readings suggest the U.S. economy may be poised for some recovery.  
     
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  Ken Goldstein
Conference Board economist
 
The Conference Board, a New York-based business research group, said its Index of Leading Indicators rose 0.5 percent in May, its biggest gain since December 1999, after rising 0.1 percent in April. Analysts surveyed by Briefing.com expected indicators to rise only 0.2 percent.

The "latest readings suggest the U.S. economy may be poised for some recovery," said Ken Goldstein, an economist for the Conference Board, though the Board said in its report it expects slow growth in the U.S. economy to continue "for the next few months."

The report comes less than a week before the Federal Reserve is to meet to decide whether to cut interest rates again. The central bank's policy makers have cut rates aggressively five times so far this year in a bid to boost the economy and prevent a recession in the United States.

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U.S. stocks moved higher early Wednesday following the release of the report. U.S. Treasury bonds were little changed.

The Conference Board's index is closely watched because it indicates where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Six of the 10 indicators that make up the index rose in May, the Board said, including interest-rate spread, stock prices and consumer expectations.

The negative contributors were vendor performance, average weekly manufacturing hours, and average weekly initial claims for unemployment insurance.

Manufacturers' new orders for consumer goods and materials held steady for the month of May, possibly a positive sign for the manufacturing sector, which has been hit hardest by the economic slowdown.

Budget deficit widens

In a separate report, the Treasury Department said the federal government posted a wider budget deficit in May 2001 than in the same month a year ago.

In its monthly budget statement, Treasury said the May shortfall totaled $27.919 billion, increasing from $3.611 billion in May 2000. The widening budget gap had been widely expected, however, due to differences in the timing of federal receipts and payments between the two months.

For the government's fiscal year to date, which was in its eighth month in May, the government remained on its track for a fourth straight annual budget surplus, at $137.082 billion. That was up from the $120.648 billion cumulative surplus seen in the same period of fiscal 2000.

The May budget gap was slightly below Wall Street expectations. Analysts polled by Briefing.com had expected a $29.5 billion deficit. The nonpartisan Congressional Budget Office had projected an even larger shortfall of $30 billion. graphic


-- from staff and wire reports

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