Global Business Cycle Indicators
|Benchmark Revisions - November 2006|
Press Release Archive
Released: Tuesday, February 7, 2006
NOTE CORRECTION MADE IN THIS RELEASE:
Data for the new orders for machinery and construction component of the Japan Leading Index has been corrected for June - December 2005. These corrections, due to a minor calculation error, affected the originally reported level of the leading index in the past six months but did not affect its monthly growth rate (except for a small change in the July value). As a result, the six month change in the leading index has also been corrected slightly. The small corrections do not affect the conclusions reported in this release.
The Conference Board reports today that the leading index for Japan increased 0.5 percent and the coincident index increased 0.2 percent in December.
- The leading index increased again in December. With December’s gain, the leading index has been growing at about a 4.0 –5.0 percent annual rate in recent months, up from the zero to slightly negative growth at the end of 2004, and only slightly below the recent high growth rate of 6.0 – 7.0 percent reached in the first half of 2004. In addition, the strength among the leading indicators continued to be widespread in recent months.
- The coincident index also increased in December, but its growth in the last quarter of 2005 was slightly slower than earlier in the year. Real GDP growth slowed to a 1.0 percent annual rate in the third quarter of 2005, down from the 5.3 percent average rate in the first half of 2005. The continued widespread improvement in the leading index suggests that the economy is likely to continue expanding in the near term, and the sluggish rate reported in the third quarter of 2005 should not persist.
Leading Indicators. Eight 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 stock prices, the (inverted) business failures, the six month growth rate of labor productivity, the new orders for machinery and construction component, the Tankan business conditions survey, dwelling units started, yield spread, and real operating profits*. Real money supply and the index of overtime worked declined in December.
With the increase of 0.5 percent in December, the leading index now stands at 101.3 (1990=100). Based on revised data, this index increased 0.5 percent in both November and October. During the six-month span through December, the index increased 2.4 percent, and eight of the ten components advanced (diffusion index, six-month span equals 80.0 percent).
Coincident Indicators. All four components that make up the coincident index increased in December. The positive contributors to the index – in order from the largest positive contributor to the smallest – include industrial production, the retail, wholesale, and manufacturing sales* component, number of employed persons, and wage and salary income*.
With the increase of 0.2 percent in December, the coincident index now stands at 105.6 (1990=100). Based on revised data, this index declined 0.1 percent in November and was unchanged in October. During the six-month span through December, the index increased 0.6 percent, and three of the four components advanced (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” 5:00 P.M. ET February 6, 2006. Some series are estimated as noted below.
* The series in the leading index that are based on The Conference Board estimates are real operating profits and the 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.
Notes: Starting with the July 2005 press release, The Conference Board uses Real Retail, Wholesale, and Manufacturing Sales as a component of the coincident index. This will replace the individual sales series previously used. Before the aggregation is done, the individual sales series will be deflated to adjust for changes in the price levels. Real wholesale sales and real manufacturing sales are deflated with the wholesale price for manufacturing goods. (As part of this revision an error in the price index that was used to deflate manufacturing sales was also corrected.) Real retail sales are deflated with the consumer price index. The resulting three deflated series are added together to provide new real retail, wholesale, and manufacturing sales data. The Coincident Index is now more consistent with other measures of economic activity, such as industrial production and GDP (particularly after 2001).
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.