The index of leading economic indicators fell 0.2 percent in June following a 0.4 percent decline in May. For this indicator, a 0.2 percent decline isn't that bad. In fact, the report states that"due to the smaller month-on-month rate of decline, the LEI's long-term growth has become less negative, pointing to a slow recovery." Over the first half of the year, the LEI fell 1.9 percent versus 2.9 percent contraction in the second half of last year. June's negatives include"gloomy" consumer expectations, weak new orders, a negative interest rate spread, and rising jobless claims. Building permits and manufacturing hours were the biggest positives.

The results are slightly less weak than expected and give a lift to Econoday's Relative Performance Index which stands at 16 to indicate that US economic data, after several months of underperformance, are beginning to come in slightly better than expected.

The LEI has missed expectations the last three reports, falling 0.5 percent in May to extend this report's dark and gloomy trend. June's consensus is a 0.3 percent decline.

The index of leading economic indicators is a composite of 10 forward-looking components including building permits, new factory orders, and unemployment claims. The report attempts to predict general economic conditions six months out.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the index of leading indicators, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly -- and causing potential inflationary pressures. The index of leading indicators is designed to predict turning points in the economy -- such as recessions and recoveries. More specifically, it was designed to lead the index of coincident indicators, also now published by The Conference Board. Investors like to see composite indexes because they tell an easy story, although they are not always as useful as they promise. The majority of the components of the leading indicators have been reported earlier in the month so that the composite index doesn't necessarily reveal new information about the economy. Bond investors tend to be less interested in this index than equity investors. Also, the non-financial media tends to give this index more press than it deserves.