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Benchmark Revisions - September 2005

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Released: Wednesday, November 12, 2008

The Conference Board announced today that the leading index for Korea declined 0.7 percent and the coincident index declined 0.4 percent in September.

  • The leading index fell again in September, its fourth decline in the past five months. The value of machinery orders, private construction orders, the stock price index, and the yield of government public bonds contributed negatively to the index this month, more than offsetting the large increase in the letters of credit arrivals component. Since March, the leading index has declined by 4.6 percent (about a -9.1 percent annual growth rate), well below the 0.1 percent increase between September 2007 and March 2008. During the last six months, the weaknesses among the leading indicators have remained very widespread.
  • The coincident index also fell in September, the third decrease in the last six months. Since March, the coincident index fell by 0.2 percent (a -0.5 percent annual rate), down from the 0.8 percent increase (about a 1.7 percent annual rate) from September 2007 to March 2008. However, the strengths and the weaknesses among the coincident indicators have been somewhat balanced. At the same time, real GDP growth has slowed to a 2.3 percent annual rate in the third quarter of 2008, down from the 3.3 percent average annual rate during the first half of 2008, and a 6.2 percent average annual rate in the second half of 2007.
  • The leading index continued its downward trend after a brief increase in July. It has declined by almost 7 percent from its most recent high in October 2007, the largest decrease since the 1997-98 decline. At the same time, the coincident index has also fallen slightly since the beginning of this year. All in all, the decline and widespread weakness in the leading index over the past six months suggest that economic activity is likely to remain sluggish in the near term, and the risks for further economic weakness remain elevated.

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

With the 0.7 percent decrease in September, the leading index now stands at 168.5 (1990=100). Based on revised data, this index declined 2.5 percent in August and increased 1.2 percent in July. During the six-month span through September, the leading index decreased 4.6 percent, with none of the seven components advancing (diffusion index, six-month span equals 0.0 percent).

COINCIDENT INDICATORS. Only one of the four components that make up the coincident index increased in September. The positive contributor was monthly cash earnings. The wholesale and retail sales component, industrial production, and total employment declined in September.

With the 0.4 percent decrease in September, the coincident index now stands at 170.7 (1990=100). Based on revised data, this index decreased 0.3 percent in August and increased 0.9 percent in July. During the six-month span through September, the coincident index decreased 0.2 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 November 11, 2008.

* 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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