A leading indicator of future economic activity declined in June, with a recession signal triggered as well, The Conference Board said in a July 21 statement.

The think tank’s Leading Economic Index (LEI), which provides an early indication of where the economy is headed over the near term, fell by 0.3 percent in June from its May level.

For the first half of 2025, the LEI was down by 2.8 percent, which was a “substantially faster rate of decline” than the 1.3 percent decline in the second half of 2024, The Conference Board said.

“For a second month in a row, the stock price rally was the main support of the LEI,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board. “But this was not enough to offset still very low consumer expectations, weak new orders in manufacturing, and a third consecutive month of rising initial claims for unemployment insurance.”

While the group’s data show negative outcomes in these fields, other data suggest otherwise.

For instance, in July, the University of Michigan’s Consumer Sentiment Index hit its highest level since February, with people’s expectations for short- and long-term inflation levels returning to their pre-tariff levels.

Meanwhile, new orders for manufactured durable goods jumped by 16.4 percent in May, according to a June 26 statement from the Census Bureau. This followed a 6.6 percent decline in April.

As for unemployment insurance, the number of U.S. workers filing for such claims for the first time declined for the fourth straight week for the week ending on July 5, according to the Department of Labor.

The Conference Board’s diffusion index, which measures how widespread the decline is among LEI’s components, has remained below the 50 level for the past six months, triggering a recession signal for the third straight month, according to Zabinska-La Monica.

“At this point, The Conference Board does not forecast a recession, although economic growth is expected to slow substantially in 2025 compared to 2024,” she said.

The GDP growth rate consistently remained in positive territory in 2024 for each quarter. For 2025, the first quarter registered a decline of 0.5 percent, the first contraction since the first quarter of 2022.

Despite The Conference Board’s prediction of an economic decline in the coming months, the business situation on the ground is showing positive signals.

The U.S. manufacturing sector grew in June, “with operating conditions improving to the greatest degree in over three years,” S&P Global said in a July 1 statement.

“Manufacturers recorded a first rise in production for four months. Growth was the second-steepest since March 2024, surpassed only by February’s near three-year record. Firms often linked the rise in production to higher volumes of new orders at their plants, which rose in June as they have done throughout the year to date,” it stated.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said business confidence has continued to improve following the low point hit in April.

Manufacturers in the country are now “more optimistic,” he said, adding that many companies have been keeping an eye on trade deals made by Washington.

The Trump administration has so far reached trade deals with Vietnam, Indonesia, and the Philippines. A limited deal has been agreed on with China regarding tariffs and export controls.

On July 17, President Donald Trump said the United States was “very close” to a trade agreement with India and that a deal with the European Union was also possible.

Countries such as Canada, Mexico, Japan, and South Korea stand to face tariffs beginning in August if they cannot reach an agreement with the United States.

Meanwhile, sentiment among small businesses is holding up. In June, the Small Business Optimism Index remained steady, the National Federation of Independent Business said in a July 8 statement.

While the net percentage of small-business owners expecting better business conditions fell by 3 points, it still represented a positive reading historically, according to the statement. On the flip side, businesses expressed concerns about taxes, labor quality, and high labor costs, according to the group.

To support domestic manufacturing, the Small Business Administration (SBA) signed an agreement with the Labor Department on July 16, according to a statement issued by the SBA.

“The agreement, which will enhance collaboration and data-sharing across key programs, is designed to cultivate a pipeline of skilled workers while also promoting capital and contracting opportunities for domestic producers—98 percent of whom are small businesses,” the SBA said.

“The agreement aligns directly with President Trump’s ongoing efforts to restore American industry and jobs.”