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Released: Monday, July 21, 2003

The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index increased 0.1 percent, and the lagging index decreased 0.5 percent in June.

  • The leading index increased in June for the third consecutive month. This suggests the flat trend in the leading index over the past year may have ended, but additional months of growth are needed to determine if an upward trend has indeed developed.
  • After declining for eleven months, the coincident index began increasing in December 2001, consistent with the officially declared November 2001 trough of the last recession. Following a moderate increase through most of 2002, this measure of current economic activity has since been essentially flat, as the leading index signaled.
  • The recent improvement in the growth rate of the leading index is consistent with near-term improvement in the growth rate of the coincident index and real GDP. However, three months of increases in the leading index is not enough to signal the beginning of a sustained period of above-trend economic growth.

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

The leading index now stands at 111.8 (1996=100). Based on revised data, this index increased 1.1 percent in May and increased 0.1 percent in April. During the six-month span through June, the leading index increased 0.5 percent, with three of the ten components advancing (diffusion index, six-month span equals 30 percent).

Coincident Indicators. Three of the four indicators that make up the coincident index increased in June. 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 June.

The coincident index now stands at 115.2 (1996=100). This index increased 0.1 percent in May and held steady in April. During the six-month period through June, the coincident index remained flat.

Lagging Indicators. The lagging index decreased 0.5 percent to 98.4 (1996=100) in June, with five 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, change in CPI for services, change in labor cost per unit of output*, and average prime rate charged by banks. Ratio of consumer installment credit to personal income* and ratio of manufacturing and trade inventories to sales* both had modest positive contributors to the index in June. The lagging index decreased 0.1 percent in May and decreased 0.4 percent in April.

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 July 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.

The procedure used to estimate the current month’s personal consumption expenditure deflator (used in the calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month’s consumer price index when it is available before the release of the U.S. Leading Economic Indicators.

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

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