Global Business Cycle Indicators
Press Release Archive
Released: Thursday, May 20, 2004
The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index increased 0.3 percent and the lagging index increased 0.2 percent in April.
- The leading index increased only slightly in April, but the March increase was revised up from 0.3 percent to 0.8 percent as actual data became available. As a result, the leading index is still increasing at an average annual rate of 3.5 to 4.0 percent.
- The coincident index continued on its steady upward trend in April. The growth rate of the coincident index has been strengthening in recent months, and every component has been contributing to this strength.
- The pickup in the growth rate of the leading index last year signaled stronger economic growth, and correspondingly, real GDP increased at a 5.5 percent annual rate over the last three quarters. The current 3.5 to 4.0 percent growth rate of the leading index is signaling the continuation of this relatively strong rate of economic growth in the near term.
Leading Indicators. Four of the ten indicators that make up the leading index increased in April. The positive contributors - beginning with the largest positive contributor – were interest rate spread, real money supply*, building permits, and stock prices. The negative contributors - beginning with the largest negative contributor – were average weekly manufacturing hours, manufacturers’ new orders for consumer goods and materials*, vendor performance, index of consumer expectations, manufacturers’ new orders for nondefense capital goods*, and average weekly initial claims for unemployment insurance (inverted).
The leading index now stands at 115.9 (1996=100). Based on revised data, this index increased 0.8 percent in March and remained unchanged in February. During the six-month span through April, the leading index increased 1.8 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 April. The positive contributors to the index - beginning with the largest positive contributor - were industrial production, employees on nonagricultural payrolls, personal income less transfer payments*, and manufacturing and trade sales*.
The coincident index now stands at 116.8 (1996=100). This index increased 0.2 percent in March and increased 0.3 percent in February. During the six-month period through April, the coincident index increased 1.4 percent.
Lagging Indicators.The lagging index stands at 98.0 (1996=100) in April, with five of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were average duration of unemployment (inverted), change in CPI for services, commercial and industrial loans outstanding*, change in labor cost per unit of output*, and ratio of consumer installment credit to personal income*. The ratio of manufacturing and trade inventories to sales* and average prime rate charged by banks held steady in April. Based on revised data, the lagging index decreased 0.1 percent in March and decreased 0.2 percent in February.
Data Availability and Notes. 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 May 19, 2004. 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.
Effective with the January 22, 2004 release a programming error in the calculation of the leading index -- in place since January 2002 -- has been corrected. The cyclical behavior of the leading index was not affected by either the calculation error or its correction, but the level of the index in the 1959-1996 period is slightly higher.
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.