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Benchmark Revisions - May 2006

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Released: Wednesday, May 17, 2006

Click here to view the May 2006 Benchmark revisions for France Leading Indicators (pdf).

This release incorporates benchmark revisions into the composite indexes. The composition of both the coincident and leading indexes for France have been revised. The details of these changes in composition can be found on page 4. (The benchmark revisions also bring the composite indexes up-to-date with data revisions in the components and update the standardization factors used in their calculation. This is a maintenance procedure typically done once a year, which usually does not change the cyclical properties of the indexes and has, as expected, very small effects.)

This release also incorporates two major methodological revisions to the composite index of leading economic indicators (LEI) for France: 1) a new method for calculating the contribution of the yield spread in the LEI and 2) a trend adjustment to the LEI. The new measure of the yield spread improves the performance of the LEI by better reflecting the way the yield spread anticipates cyclical economic turning points. The trend adjustment facilitates interpretation and use of the LEI.

These changes are the result of research at The Conference Board (TCB) and regular consultations with its Business Cycle Indicators Advisory Panel and other experts. The Conference Board continuously monitors the behavior and performance of the composite indexes and their components and makes changes from time to time. This revision is consistent with long-standing Conference Board policy to make changes to the indexes when research indicates substantial improvements are possible. Because of these revisions, the composite indexes and their monthly changes are no longer directly comparable with previous releases. Similar methodological changes were introduced into the US LEI last year and will be incorporated into the LEIs of other countries covered by The Conference Board global indicators program.

The Conference Board reports today that the leading index for France increased 0.2 percent and the coincident index increased 0.1 percent in March.

  • The leading index increased again in March, after a sharp gain in February. With March's gain, the growth rate of the leading index has picked up to about a 4.0 percent annual rate in recent months, from about a 1.0 percent annual rate through the second quarter of 2005, but this is still below the high growth rate of about 6.0 percent reached in the second quarter of 2004. In addition, the strength in the leading index continued to be somewhat more widespread in recent months.
  • The coincident index increased slightly again in March, and it has been on a slightly rising trend since mid-2003. At the same time, real GDP increased at a 2.3 percent average annual rate in the second half of 2005, up from the 0.7 percent average rate in the first half of 2005. The recent behavior of the leading index suggests that moderate economic growth is likely to persist in the near term.

LEADING INDICATORS. Four of the seven components of the leading index increased in March. The positive contributors to the index -in order from the largest positive contributor to the smallest- are the yield spread, the stock price index, the inverted new unemployment claims, and building permits (residential). Production expectations and the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing* declined in March. Industrial new orders (opinion balance) was unchanged in March.

With the increase of 0.2 percent in March, the leading index now stands at 126.5 (1990=100). Based on revised data, this index increased 1.0 percent in February and decreased 0.1 percent in January. During the six-month span through March, the leading index increased 2.2 percent, and five of the seven components increased (diffusion index, six-month span equals 71.4 percent).

COINCIDENT INDICATORS. Three of the four components of the coincident index increased in March. The positive contributors to the index were industrial production, wage and salaries*, and employment*. Personal consumption of manufacturing goods declined in March.

With the increase of 0.1 percent in March, the coincident index now stands at 119.2 (1990=100). Based on revised data, this index increased 0.1 percent in February and increased 0.1 percent in January. During the six-month period through March, the coincident index increased 0.7 percent, with all four series making a positive contribution (diffusion index, six-month span equals 100.0 percent).

In addition to our website, you may also visit the web site of our research associate in France: Rexecode.

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 May 15, 2006. Some series are estimated as noted below. NOTES: Series in the leading index that are based on The Conference Board estimates are ratio deflator of manufacturing value added to unit labor cost in manufacturing. Series in the coincident index that are based on The Conference Board estimates are number of employees and wage and salaries.

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

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