U.S. leading indicator points to deep economic slump

(C) Reuters. A Modell’s store is closed as retail sales suffer record drop during the outbreak of the coronavirus disease (COVID-19) in New York

WASHINGTON (Reuters) – A gauge of future U.S. 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% last month, the largest decrease in the series’ 60-year history. Data for February was revised down to show the index falling 0.2% instead of gaining 0.1% as previously reported. Economists polled by Reuters had forecast the index dropping 7.0% 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 U.S. 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% 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% in March after increasing 0.3% in February. But the lagging index increased 1.2% last month after gaining 0.3% in February.