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Benchmark Revisions - July 2007

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Released: Wednesday, September 10, 2008

The Conference Board announced today that the leading index for the U.K declined 0.7 percent, and the coincident index increased 0.1 percent in July.

  • The leading index decreased again in July, and it has been declining for a year now. Consumer confidence, stock prices, and volume of expected output continued to make large negative contributions to the index, more than offsetting the positive contribution from order book volume this month. The six-month change in the index continued to fall, and the leading index decreased 3.3 percent (a -6.5 percent annual rate) from January to July 2008, well below the -1.4 percent rate (a -2.8 percent annual rate) for the previous six months. In addition, the weaknesses among the leading indicators have continued to be widespread in recent months.
  • The coincident index increased slightly in July, following a modest decline in June. Retail sales rose this month, more than offsetting a drop in industrial production. The level of the coincident index was unchanged between January and July 2008, down from the 2.2 percent annual rate of growth which prevailed between July 2007 and January 2008, while the strengths and weaknesses among its components have remained balanced in recent months.
  • The leading index has been on a downtrend since the middle of 2007, and its decline has picked up recently. The six-month decline in the leading index is the largest since early 1999. Following the deterioration in the leading index, the coincident index has been essentially flat since the beginning of 2008. Meanwhile, real GDP growth has slowed sharply, down to a 0.5 percent average annual rate for the first half of the year (including 0.0 percent in the second quarter), from an average annual rate of 2.3 percent in the second half of 2007. Taken together, the recent behavior of the composite indexes suggests that the economy will remain weak in the near term.

LEADING INDICATORS. Three of the seven components that make up the leading index increased in July. The positive contributors — from the largest positive contributor to the smallest — were order book volume, productivity for the whole economy*, and operating surplus of corporations. The negative contributors — from the largest negative contributor to the smallest — were consumer confidence, stock prices, and volume of expected output. The yield spread remained unchanged in July.

With the 0.7 percent decrease in July, the leading index now stands at 123.4 (1990=100). Based on revised data, this index declined 1.0 percent in June and declined 0.6 percent in May. During the six-month span through July, the leading index decreased 3.3 percent, with two of the seven components advancing (diffusion index, six-month span equals 28.6 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in July. The positive contributors — from the largest positive contributor to the smallest — were employment *, retail sales, and real household disposable income*. Industrial production declined.

With the increase of 0.1 percent in July, the coincident index now stands at 119.9 (1990=100). Based on revised data, this index decreased 0.2 percent in June and increased 0.2 percent in May. During the six-month period through July, the coincident index remained unchanged, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).

DATA AVAILABILITY: The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on September 9, 2008. Some series are estimated as noted below.

* Series in the leading index that are based on The Conference Board estimates are productivity of the whole economy, and operating surplus of corporations. Series in the coincident index that are based on The Conference Board estimates are employment and real household disposable income.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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