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Benchmark Revisions - September 2005

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Released: Thursday, July 17, 2003

The Conference Board announced today that the leading index for Korea increased 0.3 percent and the coincident index decreased 0.2 percent in May.

  • The leading index increased for a second consecutive month in May following a sharp decline in March. The index has been essentially flat since December, suggesting that Korean economic growth is likely to slow from last year's very strong rate. Weakness in stock prices, building permits and the index of inventory-to-shipments ratio are primarily responsible for the lack of growth in the leading index since late last year.
  • The coincident index, a measure of current economic conditions, declined in May. This is the fourth consecutive decline this year, and the weakness has become more widespread. This decline in the coincident index is consistent with the slower rate of GDP growth being signaled by the leading index.
  • Similar to what is occurring in other countries, weakness in the leading index may have ended. While there is not yet a definitive signal, a sustained pickup in the leading index would be consistent with some improvement in economic growth later this year.

Leading Indicators. Six of the eight components that make up the leading index increased in May. The positive contributors - from the largest positive contributor to the smallest – include real exports, stock prices, the inverted yield of government public bonds, value of machinery orders in manufacturing, monthly hours worked* and letter of credit arrivals in manufacturing*. The negative contributors – from the larger negative contributor to the smallest – are the inverted index of inventories to shipments for manufacturing and authorized building permits.

The leading index now stands at 116.7 (1990=100). Based on revised data, this index increased 0.3 percent in April and decreased 1.0 percent in March. During the six-month span through May, the index increased 0.3 percent, with only three of its eight components advancing (diffusion index, six-month span equals 37.5 percent).

Coincident Indicators. Three of the four components that make up the coincident index decreased in May. The negative contributors to the index - from the largest negative contributor to the smallest – are the inverted unemployment rate, industrial production and total employment. The wholesale and retail sales component was unchanged.

With the decrease of 0.2 percent in May, the coincident index now stands at 111.0 (1990=100). Based on revised data, this index decreased 0.3 percent both in April and March. During the six-month span through May, the coincident index declined 0.4 percent, with only one of its components advancing (diffusion index, six-month span equals 25.0 percent).

Data Availability. The data series used to compute the two composite indexes reported in this release are those available “as of” 10 A.M. (ET) on July 14, 2003.

*Notes: The series in the leading index based on The Conference Board’s estimates are monthly hours worked and letter of credit arrivals in manufacturing.

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

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