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Released: Thursday, December 18, 2003

The Conference Board announced today that the U.S. leading index increased 0.3 percent, the coincident index increased 0.2 percent and the lagging index decreased 0.3 percent in November.

  • The leading index increased by 0.3 percent in November and upward revisions steepened the upward trend in recent months. The coincident index also continued increasing in November. Reflecting improvement in the manufacturing sector and the labor market, the growth rate of the coincident index has picked up moderately in recent months.
  • The leading index has now increased at almost a 6.0 percent annual rate from its most recent low in April, and this strength has been extremely widespread. Consistent with the upward trend of the leading index, the growth rate of the coincident index has strengthened, and real GDP growth jumped to an 8.2 percent annual rate in the third quarter.
  • The continued strong growth in the leading index (a 3.5 percent annual rate over the last 3-4 months, or 5.0 percent excluding the effect of declines in the money supply), is signaling that strong economic growth should persist in the near term.

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

The leading index now stands at 114.2 (1996=100). Based on revised data, this index increased 0.5 percent in October and remained unchanged in September. During the six-month span through November, the leading index increased 2.2 percent, with nine out of ten components advancing (diffusion index, six-month span equals 90 percent).

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

The coincident index now stands at 116.3 (1996=100). This index increased 0.3 percent in October and increased 0.2 percent in September. During the six-month period through November, the coincident index increased 1.0 percent.

Lagging Indicators. The lagging index stands at 97.0 (1996=100) in November, with three of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were change in labor cost per unit of output*, ratio of manufacturing and trade inventories to sales*, and ratio of consumer installment credit to personal income*. The negative contributors to the index – beginning with the largest negative contributor – were change in CPI for services, average duration of unemployment (inverted), and commercial and industrial loans outstanding*. The average prime rate charged by banks held steady in November. Based on revised data, the lagging index decreased 0.1 percent in October and decreased 0.5 percent in September.

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 December 17, 2003. Some series are estimated as noted below.

* 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.

Effective with the September 18, 2003 release, the method for calculating manufacturers’ new orders for consumer goods and materials (A0M008) and manufacturers’ new orders for nondefense capital goods (A0M027) has been revised. Both series are now constructed by deflating nominal aggregate new orders data instead of aggregating deflated industry level new orders data. Both the new and the old methods utilize appropriate producer price indices. This simplification remedies several issues raised by the recent conversion of industry data to the North American Classification System (NAICS), as well as several other issues, e.g. the treatment of semiconductor orders. While this simplification caused a slight shift in the levels of both new orders series, the growth rates were essentially the same. As a result, this simplification had no significant effect on the leading index.

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

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