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Released: Monday, September 23, 2002

The Conference Board announced today that the U.S. leading index decreased 0.2 percent, the coincident index increased 0.1 percent, and the lagging index decreased 0.1 percent in August.

  • The leading index declined for the third month in a row in August. This was the first time in fifteen months that the six-month growth rate was negative.
  • The weakness in the leading index was widespread, with a majority of the components showing declines.
  • The coincident index continues to indicate a weak economic recovery. Industrial production declined for the first time this year and the other three components showed little improvement.

Leading Indicators. Seven of the ten indicators that make up the leading index decreased in August. The negative contributors to the leading index—from the largest negative contributor to the smallest—were interest rate spread, average weekly initial claims for unemployment insurance (inverted), vendor performance, manufacturers' new orders for nondefense capital goods*, building permits, manufacturers' new orders for consumer goods and materials*, and index of consumer expectations. The three positive contributors to the index - beginning with the largest positive contributor - were real money supply*, average weekly manufacturing hours, and stock prices.

The leading index now stands at 111.8 (1996=100). Based on revised data, this index decreased 0.1 percent in July and decreased 0.2 percent in June. During the six-month span through August, the leading index decreased 0.1 percent, with four of the ten components advancing (diffusion index, six-month span equals 40 percent).

Coincident Indicators. Three of the four indicators that make up the coincident index increased in August. The largest contributor to the index was personal income less transfer payments*, followed by manufacturing and trade sales* and employees on nonagricultural payrolls. Industrial production declined in August.

With the increase in August, the coincident index now stands at 115.0 (1996=100). Based on revised data, this index held steady in July and increased 0.3 percent in June. During the six-month period through August, the coincident index increased 0.7 percent.

Lagging Indicators. The lagging index decreased 0.1 percent to 100.7 (1996=100) in August. Five of the seven components of the lagging index increased in August. The positive contributors to the index—beginning with the largest positive contributor—were average duration of unemployment, change in CPI for services, ratio of consumer installment credit to personal income*, change in labor cost per unit of output*, and ratio of manufacturing and trade inventories to sales*. The only negative contributor to the index was commercial and industrial loans outstanding*. Average prime rate charged by banks held steady in August. Based on revised data, the lagging index increased 0.2 percent in July and decreased 0.3 percent in June.

Data Availability. The data series used by The Conference Board to compute the three composite indexes and reported in the tables in this release are those available "as of" 12 Noon on September 20, 2002. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates are manufacturers' new orders for consumer goods and materials, manufacturers' new orders for nondefense capital goods, and the personal consumption expenditure deflator for money supply. Series in the coincident index that are based on The Conference Board estimates are personal income less transfer payments and manufacturing and trade sales. Series in the lagging index that are based on The Conference Board estimates are inventories to sales ratio, consumer installment credit to income ratio, change in labor cost per unit of output, and the personal consumption expenditure deflator for commercial and industrial loans outstanding.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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