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Benchmark Revisions - November 2006

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Released: Thursday, April 8, 2004

The Conference Board reports today that the leading index for Japan increased 0.1 percent and the coincident index decreased 0.5 percent in February.

  • The leading index increased for the tenth consecutive month in February, but there are some conflicting signals. February’s increase was only 0.1 percent, but at the same time there were large upward revisions to previous months as actual data became available. As a result, the leading index has increased at about an 8.5 percent annual rate from its most recent low in April, but at only a 4.5 percent annual rate over the last three months.
  • The coincident index declined in February following large increases in the previous two months. Fluctuations in industrial production and wholesale sales have contributed to volatility in the coincident index in recent months, but the coincident index is still up at about a 2.5 percent annual rate from its most recent low in August 2003.
  • Real GDP increased at about a 4.5 percent annual rate in the second half of 2003, and the widespread strength in the leading index has been signaling a continuation of this growth through the first half of 2004. The recent slowing in the growth rate of the leading index could be a normal short term fluctuation around a still strong trend, or could be the first warning of slower economic growth later this year. Several additional months of data will be required to determine which of these outcomes is most likely.

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

With an increase of 0.1 percent in February, the leading index now stands at 97.2 (1990=100). Based on revised data, this index increased 0.4 percent in January and increased 0.6 percent in December. During the six-month span through February, the index increased 4.0 percent, and nine of ten components advanced (diffusion index, six-month span equals 90.0 percent).

Coincident Indicators. Three of the six components that make up the coincident index increased in February. The positive contributors to the index – in order from the largest positive contributor to the smallest – include real retail sales, real manufacturing sales*, and wage and salary income*. Industrial production, real wholesale sales, and number of employed persons decreased in February.

With a 0.5 percent decrease in February, the coincident index now stands at 102.5 (1990=100). Based on revised data, this index increased 0.6 percent in January and increased 0.4 percent in December. During the six-month span through February, the index increased 1.2 percent, and three of the six components advanced (diffusion index, six-month span equals 58.3 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 April 7, 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, six month growth rate of labor productivity, 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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