The Augusta Leading Economic Index (LEI) fell 0.2 percent in July from June, the first monthly decrease since November 2020. It remains 5.3 percent higher than in July 2021, though the rate of increase has halved from November 2021.
Adverse movements were seen in initial claims for unemployment insurance and real deposits in local banks. The positive movement was seen in residential permits and the Dow Jones Industrial Average (at the end of July). Job openings were essentially unchanged.
Because job openings are the last bit of data used in the LEI, we already know what the other variables look like for August. The Dow Jones, for example, fell 4 percent in August from July and is again in bear territory in September.
Permits eke out a 2.8 percent gain and real deposits in local banks remain unchanged as inflation fell slightly in August from July, due mainly to lower gas prices.
Initial claims for unemployment insurance have shown increases of more than 20 percent in each of the last three months. If job openings remain unchanged in August, the Augusta LEI will fall another 0.8 percent. Job openings would have to double for the LEI to show a monthly increase in Augusta – highly unlikely.
The chart above shows that the Augusta LEI has been quite volatile over the last 18 months reflecting the underlying uncertainty, but the overall trend is generally downwards. Clearly, the national and local economies are facing some strong headwinds and the Augusta LEI suggests a slowing of growth in the next 3-6 months. However, until there is more consistency across the components of the index and over time, I don’t see a massive cause for concern.
