By Maria Martinez


An economic index that measures U.S. business cycles rose in August for the fourth straight month but at a slower pace than in previous months, data from the Conference Board showed Friday.

The Leading Economic Index was 106.5 in August, up 1.2% compared with July. Economists polled by The Wall Street Journal expected the indicator to increase at a pace of 1.4%. In July, the index rose by an upwardly revised 2.0% compared with June.

August' s rise, albeit slower than that of July, posts a fourth consecutive month of increases in the index, which registered in March the steepest monthly fall in the survey's history as the coronavirus pandemic took hold.

The Conference Board Leading Economic Index is based on 10 components, among them initial claims for unemployment insurance, manufacturers' new orders, building permits of new private housing units, stock prices and consumers expectations. It is intended to signal swings in the business cycle and to smooth out some of the volatility of individual indicators.

"While the U.S. LEI increased again in August, the slowing pace of improvement suggests that this summer's economic rebound may be losing steam heading into the final stretch of 2020," Conference Board Senior Director of Economic Research Ataman Ozyildirim said.

Despite the improvement, the LEI remains in recession territory, still 4.7% below its February level.

"Weakening in new orders for capital goods, residential construction, consumers' outlook, and financial conditions point to increasing downside risks to the economic recovery," Mr. Ozyildirim said.

Looking ahead to 2021, the LEI suggests that the U.S. economy will start the new year under substantially weakened economic conditions, Mr. Ozyildirim said.

The Coincident Economic Index rose 0.6% in August to 100.8, while the Lagging Economic Index decreased 0.6% in August to 107.6, data from the Conference Board showed.


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(END) Dow Jones Newswires

September 18, 2020 10:28 ET (14:28 GMT)

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