Global Business Cycle Indicators
Press Release Archive
Released: Thursday, April 17, 2008
This month's release incorporates annual benchmark revisions to the composite indexes, which bring them up-to-date with revisions in the source data. Also, with this benchmark revision, the base year of the composite indexes has been changed to 2004 = 100 from 1996 = 100. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the annual benchmark revision when the standardization factors of components and trend adjustment factors of the leading and lagging indexes are recalculated based on revised data and entire histories of the composite indexes are recomputed. In the past, these benchmark revisions were normally done in January. However, because a number of underlying data series, such as industrial production and employment, underwent benchmark revisions in early 2008, by the source agencies, a later annual benchmark for the LEI and related composite indexes allowed for the incorporation of more up-to-date component data.
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The Conference Board announced today that U.S. leading index increased 0.1 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.3 percent in March.
- The leading index increased slightly in March, following five consecutive monthly declines. Money supply (real M2)*, index of supplier deliveries (vendor performance) and the interest rate spread made large positive contributions to the index this month, offsetting the large negative contributions from initial claims for unemployment insurance (inverted), building permits and stock prices. During the six-month period ending in March, the leading index declined 1.6 percent (a -3.3 percent annual rate), and the weaknesses among its components have been very widespread.
- The coincident index also increased slightly in March, following a decline in February. Industrial production contributed positively to the index in March, more than offsetting the decline in employment. Despite this month's gain, the six-month change in the coincident index has fallen to -0.1 percent (a -0.2 percent annual rate) from September 2007 to March 2008, down from 0.6 percent (about a 1.1 percent annual rate) in the six-month period through December 2007. In addition, the weaknesses among the coincident indicators have been very widespread in recent months. The lagging index continued to increase in March, and as a result, the coincident to lagging ratio continued to decrease for the third consecutive month.
- Since the middle of 2007, the leading index has been declining while the coincident index, a measure of current economic activity, has also deteriorated in recent months. In addition, the weaknesses have also become more widespread among the components of both indexes. Meanwhile, real GDP growth slowed substantially to 0.6 percent in the fourth quarter of 2007, down from 4.9 percent in the third quarter and an average of 2.2 percent, annual rate, in the first half of 2007. The current behavior of the composite indexes suggests economic weakness is likely to continue in the near term.
LEADING INDICATORS. Five of the ten indicators that make up the leading index increased in March. The positive contributors — beginning with the largest positive contributor — were real money supply*, index of supplier deliveries (vendor performance), interest rate spread, average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials*. The negative contributors — beginning with the largest negative contributor — were average weekly initial claims for unemployment insurance (inverted), building permits, stock prices, and index of consumer expectations. Manufacturers' new orders for nondefense capital goods* held steady in March.
The leading index now stands at 102 (2004=100). Based on revised data, this index decreased 0.3 percent in February and decreased 0.4 percent in January. During the six-month span through March, the leading index decreased 1.6 percent, with three out of ten components advancing (diffusion index, six-month span equals 30 percent).
COINCIDENT INDICATORS. Three of the four indicators that make up the coincident index increased in March. 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*. The negative contributor was employees on nonagricultural payrolls.
The coincident index now stands at 107.1 (2004=100). This index decreased 0.2 percent in February and remained unchanged in January. During the six-month period through March, the coincident index decreased 0.1 percent.
LAGGING INDICATORS. The lagging index stands at 111.6 (2004=100) in March, 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, change in labor cost per unit of output*, commercial and industrial loans outstanding*, and the ratio of consumer installment credit to personal income*. The negative contributor was the average prime rate charged by banks. The ratio of manufacturing and trade inventories to sales** held steady in March. Based on revised data, the lagging index increased 0.3 percent in February and increased 0.1 percent in January.
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 April 16, 2008. 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.
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.