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Benchmark Revisions - January 2008

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Released: Thursday, March 20, 2003

The Conference Board announced today that the leading index for Australia decreased 0.1 percent and the coincident index increased 0.4 percent in January.

  • The decline in the leading index in January is the first since June 2002. A sharp drop in building approvals, along with weakening rural goods exports, were responsible for January’s decline.
  • Although it’s too soon to say that weakness is developing in the leading indicators, the financial components such as the yield spread and stock prices have registered declines in the past two months, in addition to rural exports and the housing sector. A few more months are needed in order to tell whether the upward trend in the leading index is reversing.
  • The coincident index, a measure of economic activity, increased in January after holding steady in December. The strength in the coincident index reflects improvements in employment, which has been particularly strong since November.

Leading Indicators. Three of the eight components in the leading index increased in January. The positive contributors to the index —in order from the largest positive contributor to the smallest— are money supply*, sales to inventories ratio*, and gross operating surplus*. Five of the eight components of the leading index decreased in January. The negative contributors to the index —in order from the largest negative contributor to the smallest — are building approvals*, rural goods exports*, share prices, yield spread, and the inverted “medium term”. (For details, see data availability section and tables).

With a decrease of 0.1 percent in January, the leading index now stands at 149.3 (1990=100). Based on revised data, this index increased 0.5 percent in December and increased 0.2 percent in November. During the six-month span through January, the leading index increased 2.3 percent, and five of the eight components increased (diffusion index, six-month span equals 62.5 percent).

Coincident Indicators. Four of the five components in the coincident index increased in January. The increases - in order from the largest positive contributor to the smallest – occurred in the number of employed persons, retail trade*, inverted unemployment rate, and household gross disposable income*. Industrial production* remained unchanged.

With an increase of 0.4 percent in January, the coincident index now stands at 114.1 (1990=100). Based on revised data, this index was flat in December and increased 0.3 percent in November. During the six-month period through January, the coincident index increased 1.1 percent, with four of the five components in the series making positive contributions (diffusion index, six-month span equals 90.0 percent).

Data Availability. The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available “as of” 5 P.M. ET on March 19, 2003. Some series are estimated as noted below.

*Notes: Series in the leading index that are based on The Conference Board estimates are sales to inventory ratio and gross operating surplus for private non-financial corporations, the implicit price index used to deflate rural goods exports and building approvals. (Money Supply M3 levels from April 2002 are derived from growth rates reported by RBA). Series in the coincident index that are based on The Conference Board estimates are industrial production, household disposable income, and retail trade.

Due to the Reserve Bank of Australia’s discontinuation of the 3-month Treasury Bill (for details see ‘For the Record” in the June 2002 RBA bulletin). The Conference Board will use the Bank Accepted Bill 90 Days to calculate the yield spread from now on.

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

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