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Benchmark Revisions - November 2006

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Released: Thursday, November 6, 2008

The Conference Board reports today that the leading index for Japan decreased 1.0 percent and the coincident index decreased 0.1 percent in September.

  • The leading index declined sharply in September, and the weaknesses among its components continued to be widespread. Stock prices made the largest negative contribution to the leading index in September, while business failures (inverted), the Tankan business conditions survey, dwelling units started and the six-month growth rate of labor productivity all made substantial negative contributions. The six-month rate of change for the leading index fell to -3.2 percent (about a -6.4 percent annual rate) from March 2008 to September 2008, down from the - 2.5 percent decline during the previous six-month period from September 2007 to March 2008. In addition, the weaknesses among the leading indicators have been very widespread in recent months.
  • The coincident index also declined in September. Negative contributions from the real wholesale, retail, and manufacturing sales* component, employment, and wage and salaries offset an improvement in industrial production. Since March, the coincident index has fallen by 1.5 percent (about a -3.0 percent annual rate), well below the 1.0 percent annual rate of growth in the second half of 2007. In addition, all four components in the coincident index have declined in the last six months. At the same time, real GDP declined at a 0.1 percent average annual rate in the first half of 2008 (including a -3.0 percent annual rate in the second quarter, the largest quarterly decrease in the past seven years).
  • The leading index has been falling for more than a year now, and its rate of decline continued to accelerate in recent months. During this period, weaknesses in both leading and coincident indexes have remained very widespread. The persistent and widespread deterioration in both the leading and coincident indexes suggest that economic weakness is likely to continue, and the economy is not likely to improve in the near term.

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

With the decrease of 1.0 percent in September, the leading index now stands at 80.5 (1990=100). Based on revised data, this index decreased 0.6 percent in August and decreased 0.2 percent in July. During the six-month span through September, the index decreased 3.2 percent, and three of the ten components advanced (diffusion index, six-month span equals 30.0 percent).

COINCIDENT INDICATORS. Only one of the four components that make up the coincident index increased in September. The positive contributor to the index was industrial production. The real retail, wholesale, and manufacturing sales* component, number of employed persons, and wage and salary income* declined in September.

With the decrease of 0.1 percent in September, the coincident index now stands at 106.4 (1990=100). Based on revised data, this index decreased 0.6 percent in August and decreased 0.2 percent in July. During the six-month span through September, the index decreased 1.5 percent, and none of the four components advanced (diffusion index, six-month span equals 0.0 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 November 5, 2008. 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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