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Benchmark Revisions - November 2006

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Released: Thursday, June 8, 2006

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

  • The leading index increased slightly in April, following a small decrease in March. The leading index has been growing at about a 3.0 - 4.0 percent annual rate in recent months, but this is slightly below the 4.0 - 5.0 percent rate through February. In addition, the strengths and weaknesses among the leading indicators have remained somewhat balanced in recent months.
  • The coincident index also rose in April, with industrial production and the real sales (retail, wholesale, and manufacturing sales) components being the major contributors to this month's increase. In addition, the growth rate of the coincident index continues to be somewhat more moderate in early 2006, after a pick up in the second half of 2005.
  • The leading index picked up in 2005 and through the first quarter of 2006. But this growth has been less rapid than in the first half of 2004, and it has moderated slightly in recent months. At the same time, real GDP growth slowed to a 1.9 percent annual rate in the first quarter, following a 4.3 percent rate in the fourth quarter of 2005, down slightly from the 5.6 percent average rate in the first half of 2005. The recent behavior of the leading index still suggests that the economy is likely to grow at a moderate to strong rate in the near term.

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

With the increase of 0.1 percent in April, the leading index now stands at 101.6 (1990=100). Based on revised data, this index decreased 0.2 percent in March and increased 0.3 percent in February. During the six-month span through April, the index increased 1.4 percent, and seven of the ten components advanced (diffusion index, six-month span equals 70.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in April. The positive contributors to the index - in order from the largest positive contributor to the smallest - include the retail, wholesale, and manufacturing sales* component, industrial production, and wage and salary income*. The number of employed persons declined in April.

With the increase of 0.3 percent in April, the coincident index now stands at 106.2 (1990=100). Based on revised data, this index decreased 0.1 percent in March and increased 0.1 percent in February. During the six-month span through April, the index increased 0.7 percent, and three of the four components advanced (diffusion index, six-month span equals 75.0 percent).

DATA AVAILABILITY AND NOTES. The data series used to compute the two composite indexes reported in this release are those available "as of" 5:00 P.M. ET June 5, 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, new orders for machinery, 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.

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

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