US Leading Economic Index Sees Slight Decline in May 2025 Amid Economic Slowdown
In a notable development, the Conference Board Leading Economic Index® (LEI) for the United States experienced a minor decline of 0.1% in May 2025, settling at a level of 99.0 (with 2016 set as the baseline of 100). This follows a steeper downward adjustment of 1.4% observed in April, which was revised lower from an initial estimate of 1.0%. The recent numbers reveal a more concerning trend, particularly with the LEI reflecting a cumulative decrease of 2.7% over the six-month span leading up to May 2025. This contraction represents a significant acceleration compared to the 1.4% dip recorded in the preceding six-month period.
Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, commented on the recent figures, noting the marginal decline in May. While the index suffered a slight setback, the recovery in stock prices after the previous month's drop provided a glimmer of hope and acted as a key positive influence on the LEI. However, various factors underlined the cautious sentiment in the economy: consumer pessimism persists, new orders in manufacturing have remained discouragingly weak, there has been a consecutive increase in initial unemployment insurance claims, and the decline in housing permits also contributed to the index's downturn.
The implications of the updated LEI data are significant, especially with the substantial revision in April's figures and the further decrease in May, which galvanizes concerns regarding a potential recession. Despite this warning sign, The Conference Board does not anticipate an imminent recession. Instead, they foresee a considerable deceleration in economic growth for 2025 compared to the previous year, projecting real GDP to increase by only 1.6% this year. The lingering effects of tariffs may also exacerbate this slowdown, indicating that 2026 could see even further deceleration.
Adding to the narrative, the Conference Board’s Coincident Economic Index® (CEI) depicted a contrasting trajectory, inching up by 0.1% to 115.1 in May 2025, following a 0.2% rise in April. Over the six-month timeframe stretching from November 2024 to May 2025, the CEI demonstrated a solid growth rate of 1.3%, which is substantially faster than the 0.5% growth recorded over the previous half-year. The CEI evaluates aspects such as payroll employment, personal income less transfer payments, manufacturing, and trade sales, alongside industrial production, forming a robust measure of economic conditions. Notably, industrial production was a relative weakness within the CEI in May, being the only component to report a decline.
Moreover, the Conference Board Lagging Economic Index® (LAG) witnessed an uptick of 0.4%, reaching a level of 119.6 in May 2025. This change follows a 0.3% rise in April. The growth rate over the last six months also turned positive at 0.8%, contrasting with a decline of 0.3% observed in the previous six-month period from May to November 2024.
As the economic landscape continues to evolve, all eyes will be on the upcoming release of economic indices set for July 21, 2025, at 10 AM ET, which is anticipated to offer deeper insights into the trajectory of the US economy. Stakeholders, analysts, and policymakers will be eager to decipher these indicators, which serve not only as reflective measures of current economic conditions but also as predictive tools for understanding potential turning points in the business cycle.
Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, commented on the recent figures, noting the marginal decline in May. While the index suffered a slight setback, the recovery in stock prices after the previous month's drop provided a glimmer of hope and acted as a key positive influence on the LEI. However, various factors underlined the cautious sentiment in the economy: consumer pessimism persists, new orders in manufacturing have remained discouragingly weak, there has been a consecutive increase in initial unemployment insurance claims, and the decline in housing permits also contributed to the index's downturn.
The implications of the updated LEI data are significant, especially with the substantial revision in April's figures and the further decrease in May, which galvanizes concerns regarding a potential recession. Despite this warning sign, The Conference Board does not anticipate an imminent recession. Instead, they foresee a considerable deceleration in economic growth for 2025 compared to the previous year, projecting real GDP to increase by only 1.6% this year. The lingering effects of tariffs may also exacerbate this slowdown, indicating that 2026 could see even further deceleration.
Adding to the narrative, the Conference Board’s Coincident Economic Index® (CEI) depicted a contrasting trajectory, inching up by 0.1% to 115.1 in May 2025, following a 0.2% rise in April. Over the six-month timeframe stretching from November 2024 to May 2025, the CEI demonstrated a solid growth rate of 1.3%, which is substantially faster than the 0.5% growth recorded over the previous half-year. The CEI evaluates aspects such as payroll employment, personal income less transfer payments, manufacturing, and trade sales, alongside industrial production, forming a robust measure of economic conditions. Notably, industrial production was a relative weakness within the CEI in May, being the only component to report a decline.
Moreover, the Conference Board Lagging Economic Index® (LAG) witnessed an uptick of 0.4%, reaching a level of 119.6 in May 2025. This change follows a 0.3% rise in April. The growth rate over the last six months also turned positive at 0.8%, contrasting with a decline of 0.3% observed in the previous six-month period from May to November 2024.
As the economic landscape continues to evolve, all eyes will be on the upcoming release of economic indices set for July 21, 2025, at 10 AM ET, which is anticipated to offer deeper insights into the trajectory of the US economy. Stakeholders, analysts, and policymakers will be eager to decipher these indicators, which serve not only as reflective measures of current economic conditions but also as predictive tools for understanding potential turning points in the business cycle.
Topics Financial Services & Investing）
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