Leading Economic Indicators Leap in June

Report encourages hopes for growth in 2nd half of year

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Jul 21, 2017
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After the leading economic indicators registered a 0.3% gain in May, later revised to 0.4%, economists’ expectations for June were for about the same.

Instead the index jumped 0.6%, fueling hopes of continued growth and possibly “a moderate improvement in GDP growth in the second half of the year," said Ataman Ozyildirim, director of Business Cycles and Growth Research at the Conference Board.

The leading economic indicators include such measures of economic activity as the unemployment rate, housing starts, the consumer price index, industrial production, GDP, retail sales and stock prices, among others. The report was released shortly after the Department of Labor reported initial jobless claims fell more than expected in the week ending July 15.

“June's LEI is a welcome relief,” said John Engle, president of Illinois-based Almington Capital, a family office merchant bank. “Despite facing headwinds from growing uncertainty about the Trump administration's planned tax reforms, the economy is continuing to grow at a healthy pace.”

Almington Capital invests in public equities as well as venture capital and private markets. It conducts most of its business in Chicago, but it recently relocated to the affluent village of Bull Valley, about an hour and a half northwest of Chicago.

John Dukes, founder of Fundz, a Massachusetts-based database of recently funded companies, agreed with Engle.

“To see the leading economic index jump so sharply in June at 0.6% was a real surprise,” Dukes said. “I don't think most economists expected it, and we sure didn't either. We're asking ourselves, how does this impact national startup funding from venture capital firms? With more money available in the economy, we are anticipating a pickup in startup funding across the U.S.”

John Boyd Jr., principal of Princeton, New Jersey-based business location consultant The Boyd Co. Inc., said the report was “more positive news for the economy.”

“We seem set for a summer stock market rally,” Boyd said. “The market is seeing increased corporate profits and dividend growth as well as hikes in personal income and spending. These are indicators of a stock market rally.”

Dukes was also encouraged by the report.

“As the U.S. economy continues to grow,” he said, ”we'll likely see more funds flowing into venture capital firms as well as into startups. With more and more technological innovations and continued GDP growth in the U.S., we're sure to see more investment into small and medium-sized startups. We'll certainly have our ear to the ground at Fundz to see how things play out.”