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Released: Tuesday, February 19, 2008

The Conference Board reports today that the leading index for France declined 0.5 percent and the coincident index increased 0.1 percent in December.

  • The leading index declined in December, the first decrease since February 2007. In December, small positive contributions from the yield spread, ratio of the deflator of manufacturing value added to unit labor cost for manufacturing* and the stock price index were more than offset by large negative contributions from building permits (residential), production expectations, and industrial new orders. The six-month growth rate of the leading index stands at 0.6 percent (about a 1.2 percent annual growth rate) during the six-month span through December, well below the average annual growth rate of about 2.5 to 3.0 percent during the second half of 2007 (excluding December). In addition, the weaknesses among the leading indicators became very widespread in December.
  • The coincident index increased slightly in December. Personal consumption of manufacturing goods, employment*, and industrial production made positive contributions to the coincident index; wages and salaries was the only negative contributor. The coincident index has been growing steadily throughout 2007, albeit at a slightly slower rate than at the beginning of 2007. The six-month growth rate of the coincident index stands at 0.5 percent (about a 1.0 percent annual growth rate) during the six-month span through December. In addition, the strengths among the coincident indicators remain more widespread than weaknesses in recent months.
  • After remaining essentially flat throughout most of 2006, the leading index has grown slightly, but steadily, since the middle of the first quarter in 2007. During the same period, the coincident index, a measure of current economic activity, grew in every month except November, its first decrease since April of 2006. Real GDP grew at about a 2.3 percent average annual rate in the second half of 2007 (including a 1.4 percent annual growth rate in the fourth quarter), a modest increase from an average annual growth rate of 1.9 percent in the first half of 2007. The recent behavior of the leading and coincident indexes so far still suggests moderate economic growth should continue in the near-term.

LEADING INDICATORS. Three of the seven components of the leading index increased in December. The positive contributors to the index — in order from the largest positive contributor to the smallest — are the yield spread, the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing*, and the stock price index. The negative contributors to the index — beginning with the largest negative contributor — are building permits (residential), production expectations, industrial new orders, and the inverted new unemployment claims.

With the decrease of 0.5 percent in December, the leading index now stands at 130.9 (1990=100). Based on revised data, this index increased 0.1 percent in November and increased 0.3 percent in October. During the six-month span through December, the leading index increased 0.6 percent, and two of the seven components increased (diffusion index, six-month span equals 28.6 percent).

COINCIDENT INDICATORS. Three of the four components of the coincident index increased in December. The positive contributors to the index — in order from the largest positive contributor to the smallest — are personal consumption, employment*, and industrial production. Wage and salaries* was the only negative contributor to the coincident index in December.

With the increase of 0.1 percent in December, the coincident index now stands at 122.8 (1990=100). Based on revised data, this index decreased 0.1 percent in November and increased 0.2 percent in October. During the six-month period through December, the coincident index increased 0.5 percent, with three of the four series making a positive contribution (diffusion index, six-month span equals 75.0 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 February 14, 2008. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates include the 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.

Please also visit the web site of our research associate in France: http://www.rexecode.fr/index.jsv.

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

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