The Conference Board released data in May stating that its Leading Economic Index increased 0.6% to 95.0 in April, after slipping 0.2% in March. This increase beat out prior expectations of a 0.2% growth for April, and brought the index up to its highest levels since June 2008. Economic activity is expected to slow in Q2 2013 as the effects of higher taxes and government spending cuts kick in, but the economy has continued to show some resilience, especially in the housing and labor markets.
Jobs data maintains its momentum
U.S employers added 175,000 jobs in May, signaling the economic recovery remains on track. The Labor Department stated that the unemployment rate rose slightly to 7.6% from 7.5% in April. It also revised down by 12,000 the payroll gains for the previous two months. The labor market maintained its momentum despite worries about another slowdown as the summer approaches and the effects of government spending cuts start to bite.
Consumer confidence rises to highest levels since early 2008
The Conference Board released a report showing that consumer confidence had climbed to 76.2 in May, the highest level since February 2008. This increase – which was driven by an improving outlook on hiring, rising home prices, and more optimism about business conditions – suggests that consumers may continue to keep boosting economic growth for the remainder of the year.
Home prices accelerate by most in seven years
Recently released Case-Shiller housing price index data indicated that housing prices in March 2013 increased 10.9% year-over-year, beating out prior expectations of a 10.2% growth and representing the largest increase since April 2006. The housing market turned a corner in 2012, driven by tightening inventory levels and historically low mortgage rates, and is expected to continue its recovery in 2013.
Durable goods orders show resilience, but U.S. factory output falls for the third straight month
In late May, the Commerce Department stated that orders for durable U.S. manufactured goods rose by 3.3% in April, beating out prior expectations of a 1.5% increase. The data shows that the U.S. economy has continued to hold up despite harsh fiscal austerity measures enacted earlier in the year. However, additional data released earlier in June showed that U.S. factory output in May fell for the third straight month, and represented the worst month since the end of recession, as weakness overseas overwhelmed a still-shaky manufacturing recovery at home. As such, Stephen Stanley, an economist at Pierpoint Securities, warns that “while [the durable goods orders data] was definitely better than expected, [one should] not mistake this for rip-roaring strength.”