Leading indicators point down -- or up?

Barry Ritholtz quotes Barron's Alan Abelson, who cites Merrill Lynch's David Rosenberg:

April's jobs data, he feels, "vastly overstated economic conditions last month." The gains that supposedly occurred in retail, construction and telecom just don't square with what has been happening in those sectors. He notes that the economy is undergoing a classic inventory correction and the trend in the leading economic indicator is down.

Well, the Conference Board's leading index has indeed been declining. However, Lakshman Achuthan, managing director at the Economic Cycle Research Institute, seems to think differently. He told SmartMoney.com:

We view the weakness in manufacturing, or GDP or employment numbers...as part of a slowdown that has been going on for a year. That's in contrast to those who view it as a new slowdown. We think it's the end of the slowdown. These things tell you about the current economy or the recent past. They, by definition, can't forecast. They don't tell you about the future. To [forecast] -- is it going to be softer, in the middle or stronger -- we look at the leading indicators, which are composite indexes. We look at a bunch of them, which are designed to lead turning points in the economy. They seem to have made their lows months ago. Now they're rising, which we translate into a forecast of a firmer economy in the second half of 2005 as opposed to an economy that's below trend or experiences a vicious cycle of downturn.

I sum up some of the recent news on the economy in "US employment growth underlines economy's resilience".