Why This Matters to Distributors: The economy continues to expand, but leading indicators point to slower growth ahead. Construction-related distributors face the clearest near-term headwinds as building permits weaken, while industrial distributors could continue benefiting from improving financial conditions and business investment in artificial intelligence. The report reinforces the need to monitor end markets rather than relying solely on headline economic indicators.
The Conference Board’s Leading Economic Index for the U.S. fell 0.2% in June, partially reversing gains posted in April and May and signaling that economic growth is slowing but remains on stable footing.
The index declined to 99.1 in June after a revised 0.1% increase in May. Despite the monthly decline, the LEI fell just 0.3% during the first half of 2026, a much smaller contraction than the 1.1% decline recorded during the second half of 2025.
“In June, the Leading Economic Index (LEI) for the U.S. declined and partially reversed gains registered in May and April,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board. “While some components of the LEI were little changed, the largest positive contribution from the yield spread, followed by marginal positive input from the remaining financial components, were not enough to offset weak consumer expectations and a drop in building permits across most of its categories.”
She added that the LEI’s six- and 12-month growth rates, while still negative, remained stable despite the June decline.
“Consumer spending is weakening, but strong business investment related to AI is expected to support economic activity while inflation continues to improve,” Zabinska-La Monica said. “The Conference Board raised its forecast from 1.8% to 1.9% year-over-year GDP growth for 2026.”
The LEI is composed of 10 forward-looking indicators, including manufacturing hours, initial unemployment claims, new orders, building permits, stock prices, credit conditions, the yield spread and consumer expectations. June’s decline was driven primarily by weaker building permits and deteriorating consumer expectations, which outweighed positive contributions from financial indicators.
Current economic conditions remained considerably stronger than the leading indicators suggest.
The Conference Board’s Coincident Economic Index, which measures present-day economic activity, rose 0.2% in June to 114.6, matching May’s gain. All four components — payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production — contributed positively during the month. Those indicators are among the measures used by the National Bureau of Economic Research to determine U.S. business cycles.
Meanwhile, the Lagging Economic Index held steady at 120.5 in June after slipping 0.1% in May. Its six-month growth rate turned positive, rising 1.1% during the first half of 2026 after declining 0.1% during the second half of 2025.
For wholesale distributors, the details behind the headline may be more important than the headline itself.
The decline in building permits is an early warning sign for distributors serving residential construction markets, including lumber, electrical, plumbing, HVAC and building materials. Building permits are a closely watched leading indicator for future construction activity and often signal changes in demand before they appear in distributor sales.
At the same time, weakening consumer expectations point to continued softness in discretionary and consumer-oriented product categories.
By contrast, distributors serving industrial manufacturers and capital-intensive sectors may continue to see steadier demand. Improving financial conditions and continued business investment in artificial intelligence are helping support capital spending despite softer consumer demand.
Taken together, the June data suggest the economy continues to expand, although at a slower pace. Weakness remains concentrated in housing-related activity and consumer sentiment, while business investment and current economic activity continue to provide support.
The Conference Board will release its next Leading Economic Index report on Aug. 20
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