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Benchmark Revisions - September 2005

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Released: Wednesday, September 13, 2006

The Conference Board announced today that the leading index for Korea declined 0.2 percent and the coincident index declined 0.6 percent in July.

  • The leading index decreased slightly in July, and it has declined in only two of the last six months. Value of machinery orders and index of inventories to shipments in the manufacturing sector were the only contributors to the decrease in the leading index in July. The leading index grew 2.3 percent from January to July (a 4.6 percent annual rate) and the strengths among the leading indicators have become somewhat less widespread since April. However, strengths and weaknesses in the leading index remain somewhat balanced in recent months.
  • The coincident index also declined in July, with large negative contributions from industrial production and wholesale and retail sales. This index of current economic activity grew 0.1 percent from January to July. In addition, and the strengths and weaknesses among its components have been balanced.
  • The growth of the leading index picked up rapidly in the second half of 2005, and, after fluctuating at about a 6.0 to 8.0 percent annual rate, it has slowed slightly to about a 4.0 to 5.0 percent annual rate. At the same time, real GDP growth slowed to a 4.1 percent average annual rate in the first half of 2006 (including a 3.4 percent rate in the second quarter), down from the 6.7 percent average rate in the second half of 2005. The current behavior in the leading index so far suggests that moderate economic growth should continue in the near term.

LEADING INDICATORS. Five of the seven components that make up the leading index increased in July. The positive contributors - from the largest positive contributor to the smallest - were private construction orders, letter of credit arrivals, stock prices, real exports FOB, and the (inverted) yield of government public bonds. Value of machinery orders and the (inverted) index of inventories to shipments declined in July.

With the 0.2 percent decrease in July, the leading index now stands at 154.3 (1990=100). Based on revised data, this index increased 0.8 percent in June and increased 0.6 percent in May. During the six-month span through July, the leading index increased 2.3 percent, with three of the seven components advancing (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Two of the four components that make up the coincident index increased in July. The positive contributors to the leading index - in order from the larger positive contributor to the smaller - were total employment and monthly cash earnings. The wholesale and retail sales component and industrial production declined in July.

With the 0.6 percent decrease in July, the coincident index now stands at 163.0 (1990=100). Based on revised data, this index increased 0.2 percent in June and increased 0.6 percent in May. During the six-month span through July, the coincident index increased 0.1 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 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 September 12, 2006.

* The series in the coincident index based on The Conference Board's estimates is monthly cash earnings. There is no forecasted series in the leading index.

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

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