US leading indicator points to deep economic slump

[WASHINGTON A gauge of future US economic activity suffered a record decline in March, suggesting the economy could struggle to pull out of a deep slump caused by the novel coronavirus outbreak.

The Conference Board said its index of leading economic indicators (LEI) tumbled 6.7 per cent last month, the largest decrease in the series' 60-year history. Data for February was revised down to show the index falling 0.2 per cent instead of gaining 0.1 per cent as previously reported. Economists polled by Reuters had forecast the index dropping 7.0 per cent in March.

"The sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the US economy will be facing a very deep contraction," said Ataman Ozyildirim, senior director of economic research at The Conference Board in Washington.

States and local governments have issued "stay-at-home" or "shelter-in-place" orders affecting more than 90 per cent of Americans to control the spread of Covid-19, the potentially lethal respiratory illness caused by the virus, and abruptly halting economic activity.

The slump in the LEI added to a raft of dismal data published this week. At least 22 million people have filed for unemployment benefits in the last four weeks. Retail sales suffered a record drop in March and output at factories declined by the most since 1946.

Homebuilding crumbled in March at a speed not seen in 36 years. Economists believe the economy contracted at its steepest pace since World War Two in the first quarter.

The Conference Board's coincident index, a measure of current economic conditions, fell 0.9 per cent in March after increasing 0.3 per cent in February. But the lagging index increased 1.2 per cent last month after gaining 0.3 per cent in February.

REUTERS