Global Business Cycle Indicators
Press Release Archive
Released: Thursday, November 20, 2008
The Conference Board announced today that the U.S. leading index decreased 0.8 percent, the coincident index increased 0.2 percent and the lagging index increased 0.1 percent in October.
- The leading index declined sharply in October as stock prices, building permits, consumer expectations and the index of supplier deliveries made large negative contributions to the index, despite continued positive contributions from real money supply and the interest rate spread. In the past two months, without the very large positive contributions from inflation-adjusted money supply (the largest in seven years), the leading index would have been substantially weaker. Between April and October 2008, the leading index declined 2.4 percent (a -4.7 percent annual rate), falling considerably faster than the 1.2 percent decrease (a -2.3 percent annual rate) over the previous six months. In addition, the weaknesses among the leading indicators have remained widespread in recent months.
- The coincident index increased in October, following five consecutive monthly declines. Industrial production recovered from its sharp September drop (partially due to two large hurricanes during that month), more than offsetting the continued decline in employment. Index levels were revised lower for August and September due to downward revisions for most of the components. In October, the coincident index increased slightly more than the lagging index, and the coincident-to-lagging ratio rose as a result. Since April, the coincident index has decreased 1.2 percent (a -2.4 percent annual rate), falling at a much quicker pace than the 0.4 percent rate of decline (a -0.7 percent annual rate) for the previous six months, and all of the coincident indicators decreased over the past six months.
- Both the leading and coincident indexes have been on a downward trend for at least a year now, and the pace of their declines have accelerated in recent months. The composite indexes are now decreasing at rates last seen in 2001, with widespread weakness among their components. Meanwhile, real GDP contracted at a 0.3 percent annual rate in the third quarter. Taken together, the persistent and extensive deterioration of the composite indexes continues to suggest that the economy is unlikely to improve soon, and economic activity may contract further in the near term.
LEADING INDICATORS. Three of the ten indicators that make up the leading index increased in October. The positive contributors — beginning with the largest positive contributor — were real money supply*, interest rate spread, and manufacturers' new orders for consumer goods and materials*. The negative contributors — beginning with the largest negative contributor — were stock prices, building permits, index of consumer expectations, index of supplier deliveries (vendor performance), average weekly initial claims for unemployment insurance (inverted), and manufacturers' new orders for nondefense capital goods*. Average weekly manufacturing hours held steady in October.
The leading index now stands at 99.6 (2004=100). Based on revised data, this index increased 0.1 percent in September and decreased 0.9 percent in August. During the six-month span through October, the leading index decreased 2.4 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 October. 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 105.6 (2004=100). This index decreased 0.7 percent in September and decreased 0.4 percent in August. During the six-month period through October, the coincident index decreased 1.2 percent, with none of the four components advancing (diffusion index, six-month span equals 0.0 percent).
LAGGING INDICATORS. The lagging index stands at 113.3 (2004=100) in October, with two of the seven components advancing. The positive contributors to the index — beginning with the largest positive contributor — were commercial and industrial loans outstanding* 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, change in CPI for services, and the change in index of labor cost per unit of output, manufacturing. The ratio of manufacturing and trade inventories to sales** held steady in October. Based on revised data, the lagging index increased 0.3 percent in September and increased 0.4 percent in August.
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 November 19, 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.