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Released: Thursday, March 20, 2003

The Conference Board announced today that the U.S. leading index decreased 0.4 percent, the coincident index held steady, and the lagging index decreased 0.1 percent in February.

  • The leading index fell in February for the first time since September 2002. Uncertainty over war in Iraq, as well as severe winter weather in February, is reflected in the widespread weakness, particularly in stock prices, consumer expectations, and the labor market. Some of these weaknesses have persisted through March.
  • More generally, the leading index has been fluctuating around a flat trend over the past 15 months with a balance between rising and falling components. The index fell in the third quarter of 2002, rose in the fourth quarter, and is now declining again in the first quarter.
  • After flattening in the fourth quarter of last year, the coincident index, a measure of current economic activity, increased 0.2 in January and held that level in February (with a decline in employment offsetting the gains in income, production, and sales). At this point, the leading index is suggesting that economic growth may be on the sluggish side in the second quarter.

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

The leading index now stands at 111.1 (1996=100). Based on revised data, this index increased 0.2 percent in January and increased 0.2 percent in December. During the six-month span through February, the leading index increased 0.2 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 February. The positive contributors to the index, beginning with the largest positive contributor - were personal income less transfer payments*, manufacturing and trade sales*, and industrial production. Employees on nonagricultural payrolls declined in February.

The coincident index now stands at 115.5 (1996=100). Based on revised data, this index increased 0.2 percent in January and held steady in December. During the six-month period through February, the coincident index increased 0.2 percent.

Lagging Indicators. The lagging index decreased 0.1 percent to 99.3 (1996=100) in February, with three of the seven components declining. The negative contributors to the index – beginning with the largest negative contributor – were commercial and industrial loans outstanding*, average duration of unemployment, and change in labor cost per unit of output*. The positive contributors to the index were change in CPI for services*, ratio of consumer installment credit to personal income*, and ratio of manufacturing and trade inventories to sales*. Average prime rate charged by banks held steady in February. Based on revised data, the lagging index increased 0.1 percent in January and decreased 0.2 percent in December.

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 March 19, 2003. 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, change in CPI for services, 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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