RALEIGH – Although the NCSU Index of North Carolina Leading Economic Indicators retreated in June, the drop was driven by declines in the national index and in building permits. On the up-side, there were fewer initial claims for unemployment and the manufacturing sector was stable. What does this mean for the economic outlook: no recession, recession, or a hybrid?
The Index fell 0.3%, although this was less than half the drop in the national leading economic index. However, in addition to the national index – which is a component of the North Carolina Index – the only component that retreated was building permits, which fell by over 9%.
National trends in Walden’s view
Initial claims for unemployment were 6.3% lower than in May, and both manufacturing hours and earnings were unchanged.
These results can be viewed as encouraging, with the manufacturing sector stable and the labor market improving. It again shows the inconsistencies in the economic outlook, with sectors of the economy moving in opposite directions.
While an official recession is still a possibility, the future could also be a hybrid outlook, with some sectors declining while others are stable or improving. If “new and different” is something you like, we may soon be seeing it in the economy.
About the Index: The Index is composed of five components: the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index (http://www.businesscycle.com/resources/), North Carolina initial claims for unemployment benefits, North Carolina building permits, average weekly hours of work of all North Carolina employees in manufacturing, and average weekly earnings of all North Carolina employees in manufacturing. All data are seasonally-adjusted and modified for differences in prices levels where appropriate. Data are from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and ECRI, whose permission to use their Weekly Leading Index is greatly appreciated. All calculations are done by Dr. Michael Walden, and comments can be sent to email@example.com.