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Released: Monday, May 19, 2008

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 0.1 percent in April.

  • The leading index increased for the second straight month in April. Stock prices, the interest rate spread, and housing permits made large positive contributions to the index this month, more than offsetting the sharp declines in average weekly hours and consumer expectations. In April, the six-month rate of decline in the leading index slowed to -1.2 percent (a -2.3 percent annual rate), from - 2.4 percent (a -4.7 percent annual rate) from July 2007 to January 2008. In addition, the weaknesses among the leading indicators have become somewhat less widespread in the last two months.
  • The coincident index was unchanged again in April, and this measure of current economic activity has not increased since October 2007. Industrial production and employment decreased this month, but these declines were offset by gains in personal income less transfer payments* and real manufacturing and trade sales*. The six-month change in the coincident index continued to fall, to -0.4 percent (a -0.7 percent annual rate) in April, down from an increase of 0.3 percent (a 0.6 percent annual rate) from July 2007 to January 2008. The lagging index continued to increase this month and as a result, the coincident to lagging ratio decreased further.
  • After declining steadily since the middle of 2007, the leading index appears to have stabilized lately, increasing slightly in March and April. Meanwhile, the coincident index declined slightly since October 2007 and the weaknesses among its components have been widespread in recent months. During the first quarter, real GDP expanded at a 0.6 percent annual rate, the same growth rate that prevailed in the fourth quarter of 2007. The current behavior of the composite indexes so far still suggests that economic activity is likely to remain weak in the near term.

LEADING INDICATORS Six of the ten indicators that make up the leading index increased in April. The positive contributors — beginning with the largest positive contributor — were stock prices, interest rate spread, building permits, average weekly initial claims for unemployment insurance (inverted), index of supplier deliveries (vendor performance) and manufacturers' new orders for consumer goods and materials*. The negative contributors — beginning with the largest negative contributor — were index of consumer expectations, average weekly manufacturing hours, and manufacturers' new orders for nondefense capital goods*. Real money supply* held steady in April.

The leading index now stands at 102.0 (2004=100). Based on revised data, this index increased 0.1 percent in March and decreased 0.3 percent in February. During the six-month span through April, the leading index decreased 1.2 percent, with four out of ten components advancing (diffusion index, six-month span equals 40 percent).

COINCIDENT INDICATORS Two of the four indicators that make up the coincident index increased in April. The positive contributors to the index — beginning with the larger positive contributor — were personal income less transfer payments* and manufacturing and trade sales*. The negative contributors were industrial production and employees on nonagricultural payrolls.

The coincident index now stands at 106.9 (2004=100). This index remained unchanged in March and decreased 0.3 percent in February. During the six-month period through April, the coincident index decreased 0.4 percent.

LAGGING INDICATORS The lagging index stands at 112.2 (2004=100) in April, with three of the seven components advancing. The positive contributors to the index — beginning with the largest positive contributor — were commercial and industrial loans outstanding*, change in CPI for services, and ratio of consumer installment credit to personal income*. The negative contributors — beginning with the largest negative contributor — were average duration of unemployment (inverted), average prime rate charged by banks, and change in labor cost per unit of output*. The ratio of manufacturing and trade inventories to sales* held steady in April. Based on revised data, the lagging index increased 0.4 percent in March and increased 0.4 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 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.

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