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Benchmark Revisions - November 2006

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Released: Tuesday, February 10, 2004

The Conference Board reports today that the leading index for Japan increased 0.6 percent and the coincident index increased 0.1percent in December.

  • The leading index increased for the eighth consecutive month in December. The leading index is now up at an 8.4 percent annual rate since its most recent low in April and this strength continues to be widespread.
  • Growth this strong in the leading index has occurred only twice in the last ten years, once in 1999 and also briefly in 2002. In both instances, real GDP growth picked up to about a 4.0 percent annual rate although only briefly in 2002.
  • The coincident index fluctuated around a flat trend in 2003 but this is not unusual when real GDP is increasing slowly, i.e., at less than a 2.0 percent annual rate. If real GDP growth picks up in 2004 (as signaled by the strength in the leading index), the historical relationship suggests that the coincident index will start increasing.

Leading Indicators.Nine of the ten components that make up the leading index increased in December. The positive contributors to the index – in order from the largest positive contributor to the smallest – include the six month growth rate of labor productivity, dwelling units started, business failures, (inverted) index of overtime worked, real operating profits*, the Tankan business conditions survey, stock prices, new orders for machinery and construction*, and yield spread. Real money supply declined in December.

With an increase of 0.6 percent in December, the leading index now stands at 95.8 (1990=100). Based on revised data, this index increased 0.6 percent in November and increased 1.1 percent in October. During the six-month span through December, the index increased 4.0 percent, and nine of the ten components advanced (diffusion index, six-month span equals 85.0 percent).

Coincident Indicators. Three of the six components that make up the coincident index decreased in December. The negative contributors to the index – in order from the largest negative contributor to the smallest – include industrial production, real wholesale sales, and real manufacturing sales*. Number of employed persons and wage and salary income* increased in December. Real retail sales remained unchanged.

With a 0.1 percent increase in December, the coincident index now stands at 101.4 (1990=100). Based on revised data, this index decreased 0.5 percent in November and increased 0.1 percent in October. During the six-month span through December, the index decreased 0.6 percent, and two of the six components advanced (diffusion index, six-month span equals 33.3 percent).

Data Availability.The data series used to compute the two composite indexes reported in this release are those available “as of” 5:00 P.M. ET February 9, 2004. Some series are estimated as noted below.

*Notes: The series in the leading index that are based on The Conference Board estimates are real operating profits and new orders for machinery. The series in the coincident index that are based on The Conference Board estimates are real manufacturing sales and wage and salary income.

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

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