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Benchmark Revisions - September 2005

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Released: Thursday, October 11, 2007

The next release of The Conference Board's Korea Leading Economic Indicators and Related Composite Indexes, scheduled for November 12, 2007, will incorporate benchmark revisions to bring the history of the composite indexes up-to-date with data revisions in their existing components and update the standardization factors used in the calculations. This is a maintenance procedure typically done once a year, which usually does not change the cyclical properties of the indexes and has, as expected, relatively small effects. Also, starting with that release a trend adjustment procedure will be added to the LEI methodology. Detailed descriptions and discussion of the changes will be posted on our web site. Please visit us here at: http://www.conference-board.org/economics/bci.

The Conference Board announced today that the leading index for Korea declined 0.1 percent, while the coincident index increased 0.5 percent in August.

  • The leading index declined slightly in August, following increases in the previous three months. Stock prices and value of machinery orders were the largest contributors to this month's decline in the leading index, offsetting large increases in private construction orders and real exports FOB. Despite the decline in August, the growth rate of the leading index continued to increase, to 1.3 percent (a 2.6 percent annual rate) from February to August, from the -0.7 percent (a -1.4 percent annual rate) in March. However, it is still well below the 2.0-4.0 percent rate (3.0 to 5.0 percent annual rate) reached in late 2006. The strengths and weaknesses among the leading indicators have been somewhat balanced during the last several months.
  • The coincident index increased again in August, and its six-month growth rate has picked up somewhat in recent months. Industrial production continued to make the largest positive contributions to the coincident index. In addition, the strengths in the index continued to be more widespread than the weaknesses in recent months. At the same time, real GDP grew at a 5.5 percent average annual rate in the first half of 2007 (including a 7.4 percent rate in the second quarter), up from a 4.4 percent average annual rate in the second half of 2006. Despite the volatility, the recent behavior in the leading index so far still suggests that economic growth is likely to continue at a moderate rate in the near term.

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

With the 0.1 percent decrease in August, the leading index now stands at 160 (1990=100). Based on revised data, this index increased 0.5 percent in July and increased 0.5 percent in June. During the six-month span through August, the leading index increased 1.3 percent, with three of the seven components advancing (diffusion index, six-month span equals 42.9 percent).

COINCIDENT INDICATORS. All four components that make up the coincident index increased in August. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — were industrial production, the wholesale and retail sales component, total employment, and monthly cash earnings.

With the 0.5 percent increase in August, the coincident index now stands at 169.8 (1990=100). Based on revised data, this index increased 0.4 percent in July and increased 0.5 percent in June. During the six-month span through August, the coincident index increased 1.2 percent, with three of the four components advancing (diffusion index, six-month span equals 75.0 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 October 10, 2007.

* 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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