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Released: Monday, April 21, 2003

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

  • The leading index declined for a second consecutive month in March, but the information available so far in April suggests that these declines will not continue. The leading index has been fluctuating around a flat trend since December 2001.
  • The flatness in the leading index suggests that U.S. real GDP growth will stay in the 2-3% range for now. As long as economic growth is constrained in this range, the labor market cannot improve.
  • The coincident index has been essentially flat in recent months with gains in income and sales offset by weakness in employment and industrial production. With economic growth at or slightly below potential, the coincident index is unlikely to grow strongly.

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

The leading index now stands at 110.6 (1996=100). Based on revised data, this index decreased 0.5 percent in February and increased 0.1 percent in January. During the six-month span through March, the leading index increased 0.2 percent, with three of the ten components advancing (diffusion index, six-month span equals 35 percent).

Coincident Indicators. Two of the four indicators that make up the coincident index increased in March. The positive contributors to the index, beginning with the larger positive contributor - were personal income less transfer payments* and manufacturing and trade sales*. Industrial production and employees on nonagricultural payrolls declined in March.

The coincident index now stands at 115.3 (1996=100). Based on revised data, this index decreased 0.2 percent in February and increased 0.3 percent in January. During the six-month period through March, the coincident index increased 0.1 percent.

Lagging Indicators. The lagging index decreased 0.1 percent to 99.2 (1996=100) in March, with two of the seven components declining. The negative contributors to the index – beginning with the larger negative contributor – were commercial and industrial loans outstanding* and change in labor cost per unit of output*. The positive contributors to the index were average duration of unemployment, change in CPI for services*, and ratio of manufacturing and trade inventories to sales*. Ratio of consumer installment credit to personal income* and average prime rate charged by banks held steady in March. Based on revised data, the lagging index decreased 0.2 percent in February and increased 0.2 percent in January.

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 April 18, 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, 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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