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Benchmark Revisions - November 2006

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Released: Thursday, December 9, 2004

The Conference Board reports today that the leading index for Japan decreased 0.3 percent and the coincident index increased 0.1 percent in October.

  • The leading index declined for the third consecutive month in October, and the weakness in the leading index has become somewhat more widespread. At the same time, real GDP growth slowed to a 0.3 percent annual rate in the third quarter of 2004, down from 1.1 percent in the second quarter and a 5.2 percent average rate over the previous year.
  • The recent weakness in the leading index is probably a short-term fluctuation around a higher average growth rate. The leading index has declined at a 3.6 percent rate over the last three months, but this follows a very rapid 10.3 percent growth over the previous three months, which is why the six-month growth rate is still 5.2 percent. This recent behavior of the leading index suggests that the economy will continue to grow, probably above the 0.7 percent average of the last two quarters but below the 5.2 percent average of the preceding year.

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

With the decrease of 0.3 percent in October, the leading index now stands at 98.6 (1990=100). Based on revised data, this index decreased 0.3 percent both in September and August. During the six-month span through October, the index increased 1.5 percent, and seven of ten components advanced (diffusion index, six-month span equals 70.0 percent).

Coincident Indicators.Two of the six components that make up the coincident index increased in October. The positive contributors to the index – in order from the larger positive contributor to the smaller – include real wholesale sales and wage and salary income*. Number of employed persons, industrial production, real retail sales, and real manufacturing sales* declined in October.

With the increase of 0.1 percent in October, the coincident index now stands at 100.8 (1990=100). Based on revised data, this index decreased 0.2 percent in September and remained steady in August. During the six-month span through October, the index decreased 0.1 percent, and four of the six components advanced (diffusion index, six-month span equals 66.7 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 December 8, 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 six month growth rate of labor productivity. 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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