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Released: Thursday, August 21, 2003

The Conference Board announced today that the U.S. leading index increased 0.4 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.1 percent in July.

  • The leading index increased for the fourth consecutive month in July. The leading index has now increased significantly (almost 2 percent) from its recent low in March, and this growth has been widespread.
  • The coincident index increased slightly in July. The coincident index has now been rising gradually from its recent low in April, with increases in personal income, industrial production, and manufacturing and trade sales partially offset by continued declines in employment.
  • The recent improvement in the growth rate of the leading index is similar to its performance at the end of 2001 and in early 2002, which was followed by stronger economic growth. The leading index is again signaling a pickup in the rate of economic growth, which is starting to be reflected in both real GDP and the coincident index.

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

The leading index now stands at 112.5 (1996=100). Based on revised data, this index increased 0.3 percent in June and 1.1 percent in May. During the six-month span through July, the leading index increased 1.2 percent, with six of the ten components advancing (diffusion index, six-month span equals 60 percent).

Coincident Indicators. Three of the four indicators that make up the coincident index increased in July. The positive contributors to the index - beginning with the largest positive contributor - were industrial production, personal income less transfer payments*, and manufacturing and trade sales*. Employees on nonagricultural payrolls declined in July.

The coincident index now stands at 115.2 (1996=100). This index held steady in June and increased 0.1 percent in May. During the six-month period through July, the coincident index decreased 0.3 percent.

Lagging Indicators. The lagging index increased 0.1 percent to 98.2 (1996=100) in July, with three of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were commercial and industrial loans outstanding*, average duration of unemployment (inverted), and change in labor cost per unit of output*. The two negative contributors were average prime rate charged by banks and change in CPI for services. Ratio of consumer installment credit to personal income* and ratio of manufacturing and trade inventories to sales* both held steady in July. Based on revised data, the lagging index decreased 0.8 percent in June and decreased 0.1 percent in May.

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 August 20, 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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