US leading index falls as housing permits and expectations weaken

The Conference Board’s Leading Economic Index fell 0.2% in June, with weaker consumer expectations for business conditions and fewer private housing building permits outweighing gains elsewhere in the indicator. The move points to a still-uneven near-term economic picture, as the group said its six- and 12-month growth rates remained negative but stable.

The Conference Board said in a July 20 release that eight of the LEI’s 10 components improved during the month. Those advances were not enough to offset declines in the two components tied to household expectations and residential construction authorizations.

The LEI is designed to signal the likely direction of the economy over the near term. It combines multiple forward-looking measures, so a fall in one or two components can move the headline index when those declines are large enough to outweigh improvement elsewhere.

Justyna Zabinska-La Monica, senior manager for business cycle indicators at The Conference Board, said in the release that the latest decline came alongside stable, though still negative, medium-term growth rates for the index. She said consumer spending was weakening, while business investment linked to artificial intelligence was expected to support activity as inflation continued to improve.

The Conference Board also lifted its forecast for 2026 gross domestic product growth to 1.9% year over year from 1.8%, according to Zabinska-La Monica’s statement in the release.

Other recent indicators showed a more supportive tone in parts of the consumer and small-business economy. The University of Michigan’s Surveys of Consumers reported that consumer sentiment rose 10% in early July, helped partly by improved expectations for business conditions over the coming year.

The survey’s preliminary July reading put the Index of Consumer Sentiment at 54.4. The University of Michigan said that was the strongest level since February, when the index stood at 56.6.

Joanne Hsu, director of the Surveys of Consumers, said in a release that all five components of the index improved. She said the strongest gains came from buying conditions for durable goods and year-ahead business conditions, each up 20%, and that the improvement appeared across age, income, wealth and political groups.

Small-business sentiment also improved in June, according to the National Federation of Independent Business. The NFIB said on July 14 that its Small Business Optimism Index rose as owners reported better expectations for business conditions and sales.

The net share of small-business owners expecting better conditions over the next six months increased for the first time this year, according to the NFIB. That helped move the index close to its 52-year average.

The NFIB report’s authors said current conditions gave small firms both positive developments and continuing challenges. They cited lower oil prices as a source of relief for most businesses and as a factor leaving consumers with more discretionary income.

This story draws on original reporting from PYMNTS.