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Benchmark Revisions - March 2007

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Released: Wednesday, January 24, 2007

The next release of The Conference Board's Germany Leading Economic Indicators and Related Composite Indexes, scheduled for February 20, 2007, will incorporate benchmark revisions to bring the history of the composite indexes up-to-date with data revisions in their existing components and update the standardization factors used in the calculations. 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, relatively small effects. In addition, this benchmark revision will introduce several methodological changes. For more details, please see page 3 of the attached pdf.

The Conference Board announced today that the leading index for Germany declined 0.2 percent and the coincident index remained unchanged in November.

  • The leading index decreased again in November, largely driven by negative contributions from new orders in investment goods and new residential construction orders. The leading index grew 0.2 percent from May to November (about a 0.4 percent annual rate) and its six-month growth rate has slowed to about a 0.5 percent average annual rate in the last two months, down from a very rapid rate of 5.0 to 6.0 percent (annual rate) in the first quarter of 2006. Still, the strengths and weaknesses among the leading indicators have been fairly balanced in recent months.
  • The coincident index remained unchanged in November, following a slight increase in October. Negative contributions from retail trade were offset by positive contributions from employment, manufacturing sales, and industrial production in October. At the same time, real GDP grew at a 2.6 percent annual rate in the third quarter of 2006, down from the 3.8 percent average annual rate in the first half of 2006. The behavior of the leading index so far still suggests that moderate economic growth is likely to continue in the near term.

LEADING INDICATORS. Four of the eight components in the leading index increased in November. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — are consumer confidence, stock prices, inventory change series*, and gross enterprises and properties income*. Negative contributors — in order from largest to smallest — are new orders in investment goods industries, new residential construction orders, the growth rate of CPI for services, and yield spread.

With the 0.2 percent decrease in November, the leading index now stands at 106.9 (1990=100). Based on revised data, this index declined 0.3 percent in October and increased 0.1 percent in September. During the six-month span through November, the leading index increased 0.2 percent, with four of the eight components increasing (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in November. The positive contributors to the coincident index were employed persons, manufacturing sales, and industrial production. Retail trade declined in November.

Unchanged in November, the coincident index now stands at 106.9 (1990=100). Based on revised data, this index increased 0.1 percent in October and remained unchanged in September. During the six-month period through November, the coincident index increased 0.9 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).

DATA AVAILABILITY The data series used to compute the two composite indexes reported in this release are those available "as of" 10:00 A.M. ET January 23, 2007. Some series are estimated as noted below.

NOTES: Series in the leading index for Germany that are based on The Conference Board estimates are inventory change, new residential construction orders, and gross enterprises and properties income. There are no series in the coincident index for Germany that are based on The Conference Board estimates.

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

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