Global Business Cycle Indicators
Press Release Archive
Released: Thursday, October 19, 2006
The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index remained unchanged and the lagging index increased 0.2 percent in September.
- The leading index increased in September, following two consecutive declines. From March to September, the leading index fell by 0.9 percent (a -1.7 percent annual rate). The leading index has declined in 5 of the last 8 months. Weaknesses offset strengths among the leading indicators in recent months. Weakening manufacturers' new orders of nondefense goods and housing permits made the largest negative contributions to the leading index from March to September, offsetting positive contributions from M2 money supply and consumer expectations.
- The coincident index remained unchanged in September. This measure of current economic activity has been increasing consistently since September 2005, although the pace moderated in recent months. From March to September, the coincident index grew 0.8 percent (a 1.6 percent annual rate), and the strengths continued to be more widespread than weaknesses in recent months.
- The leading index has fallen 1.0 percent below its most recent high reached in January. At the same time, real GDP growth slowed to a 2.6 percent (annual) rate in the second quarter, following a 5.6 percent gain in the first quarter. The behavior of the leading index so far suggests that economic growth should continue at the slow rate in the near term.
LEADING INDICATORS.Five of the ten indicators that make up the leading index increased in September. The positive contributors - beginning with the largest positive contributor - were index of consumer expectations, real money supply*, stock prices, average weekly initial claims for unemployment insurance (inverted), and manufacturers' new orders for nondefense capital goods*. The negative contributors - beginning with the largest negative contributor - were building permits, average weekly manufacturing hours, vendor performance, interest rate spread, and manufacturers' new orders for consumer goods and materials*.
The leading index now stands at 137.7 (1996=100). Based on revised data, this index decreased 0.2 percent in August and decreased 0.3 percent in July. During the six-month span through September, the leading index decreased 0.9 percent, with five out of ten components advancing (diffusion index, six-month span equals 45 percent).
COINCIDENT INDICATORS.Three of the four indicators that make up the coincident index increased in September. The positive contributors to the index - beginning with the largest positive contributor - were personal income less transfer payments*, manufacturing and trade sales*, and employees on nonagricultural payrolls. The negative contributor was industrial production.
The coincident index now stands at 123.3 (1996=100). This index increased 0.2 percent in August and increased 0.1 percent in July. During the six-month period through September, the coincident index increased 0.8 percent.
LAGGING INDICATORS.The lagging index stands at 124.3 (1996=100) in September, with two of the seven components advancing. The positive contributors to the index - beginning with the largest positive contributor - were change in CPI for services and ratio of consumer installment credit outstanding to personal income. The negative contributors - beginning with the largest negative contributor - were commercial and industrial loans outstanding* and change in labor cost per unit of output*. The average duration of unemployment (inverted), ratio of manufacturing and trade inventories to sales* and average prime rate charged by banks* held steady in September. Based on revised data, the lagging index increased 0.2 percent in August and decreased 0.2 percent in July.
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 October 18, 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.