Global Business Cycle Indicators
|Benchmark Revisions - November 2006|
Press Release Archive
Released: Tuesday, December 9, 2008
Next month's release will incorporate annual benchmark revisions to the composite indexes, which bring them up-to-date with revisions in the source data. Also, the base year of the composite indexes will be changed to 2004=100 from 1990=100. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes will no longer be comparable to those issued prior to the benchmark revision.
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The Conference Board reports today that the leading index for Japan decreased 2.5 percent and the coincident index decreased 0.5 percent in October.
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- In October, the leading index experienced its largest monthly decline since 1975, due to substantial declines in stock prices, the six-month growth rate of labor productivity, index of overtime worked, Tankan business conditions index, new orders for machinery and construction, dwelling starts, and (inverted) business failures. With October's large decline, the six-month growth rate for the leading index fell to -5.8 percent (about a -11.2 percent annual rate) from April to October 2008, down from the 2.1 percent decline (a -4.2 percent annual rate) during the previous six-month period. Moreover, during the last six months, the weaknesses among the leading indicators have been very widespread.
- The coincident index, a measure of current economic activity, declined for the fifth time in six months in October, with industrial production making the largest negative contribution. Between April and October, the coincident index fell by 2.6 percent (a -5.1 percent annual rate), well below the 0.6 percent decline (about a -1.3 percent annual rate) for the period between October 2007 and April 2008. The weaknesses among the coincident indicators continued to be very widespread, as all four components declined in the last six months. At the same time, real GDP continued its downtrend through the third quarter of 2008 - it declined at a 0.4 percent annual rate, following a 3.7 percent contraction in the second quarter of the year. This is the first time since the second half of 2001 that real GDP has declined in consecutive quarters.
- The leading index has been falling for more than a year now, and its rate of decline has picked up in recent months. Following the leading index, the coincident index has also been on a downward trend since late 2007. In addition, the weaknesses in both composite indexes have been very widespread during this period. All in all, the accelerating and widespread deterioration in the leading and coincident indexes suggests that economic weakness is likely to continue, and that the contraction in economic activity may deepen in 2009.
LEADING INDICATORS. Two of the ten components that make up the leading index increased in October. The positive contributors to the index — in order from the larger positive contributor to the smaller — include interest rate spread and real operating profits*. The negative contributors — in order from the largest negative contributor to the smallest — include stock prices, the six month growth rate of labor productivity, the index of overtime worked, the Tankan business conditions survey, the new orders for machinery and construction component*, the (inverted) business failures*, dwelling units started, and real money supply.
With the decrease of 2.5 percent in October, the leading index now stands at 78.3 (1990=100). Based on revised data, this index decreased 1.1 percent in September and decreased 0.7 percent in August. During the six-month span through October, the index decreased 5.8 percent, and two of the ten components advanced (diffusion index, six-month span equals 20.0 percent).
COINCIDENT INDICATORS. Only one of the four components that make up the coincident index increased in October. The positive contributor to the index was number of employed persons. Industrial production, wage and salary income*, and the retail, wholesale, and manufacturing sales* component all declined in October.
With the decrease of 0.5 percent in October, the coincident index now stands at 105.6 (1990=100). Based on revised data, this index remained unchanged in September and decreased 0.7 percent in August. During the six-month span through October, the index decreased 2.6 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 December 8, 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 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.