Global Business Cycle Indicators
Press Release Archive
Released: Monday, March 20, 2006
The Conference Board announced today that the U.S. leading index decreased 0.2 percent, the coincident index increased 0.3 percent and the lagging index increased 0.1 percent in February.
- The leading index decreased in February following four consecutive increases. The leading index increased 1.5 percent from August 2005 to February 2006 (a 2.9 percent annual rate). The largest negative contributors to the February decrease were vendor performance index and index of consumer expectations, and the strengths and weakness among the leading indicators were balanced in February.
- The coincident index, a measure of current economic activity, increased in February, and it has increased in five of the last six months. In addition, strength among its components has been widespread in recent months.
- The leading index has been fluctuating around a more moderate upward trend since mid- 2004. At the same time, real GDP growth slowed to a 1.6 percent annual rate in the fourth quarter of 2005. The current behavior of the leading index still suggests that the sluggish growth in the fourth quarter should not persist, and economic growth is likely to pick up in the near term.
LEADING INDICATORS. Five of the ten indicators that make up the leading index increased in February. The positive contributors – beginning with the largest positive contributor – were manufacturers’ new orders for nondefense capital goods*, real money supply*, average weekly manufacturing hours, manufacturers’ new orders for consumer goods and materials*, and interest rate spread. The negative contributors were vendor performance, index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), building permits, and stock prices.
The leading index now stands at 139.0 (1996=100). Based on revised data, this index increased 0.5 percent in January and increased 0.3 percent in December. During the six-month span through February, the leading index increased 1.5 percent, with eight out of ten components advancing (diffusion index, six-month span equals eighty percent).
COINCIDENT INDICATORS. All of the four indicators that make up the coincident index increased in February. 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 122.1 (1996=100). This index remained unchanged in January and increased 0.4 percent in December. During the six-month period through February, the coincident index increased 2.2 percent.
LAGGING INDICATORS. The lagging index stands at 122.6 (1996=100) in February, with two of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were average prime rate charged by banks, and change in labor cost per unit of output*. The negative contributors – beginning with the largest negative contributor – were average duration of unemployment (inverted) and commercial and industrial loans outstanding*. The ratio of manufacturing and trade inventories to sales*, ratio of consumer installment credit to personal income*, and change in CPI for services* held steady in February. Based on revised data, the lagging index increased 0.5 percent in January and decreased 0.1 percent in December.
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 March 17, 2006. 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 used to deflate the 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, the consumer price index, and the personal consumption expenditure used to deflate 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.