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Benchmark Revisions - January 2008

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Released: Wednesday, July 23, 2003

The Conference Board announced today that the leading index for Australia increased 0.5 percent and the coincident index increased 0.2 percent in May.

  • The leading index increased for the third consecutive month, with the greatest contributions coming from money supply and the government bond yield. These contributions were partially offset by weaker rural goods exports, which have been negative for much of 2003.
  • These three consecutive monthly increases have now boosted the index slightly above the flat trend, which had been in place since October. However, weakness in the leading indicators has also become somewhat more widespread, with the six-month diffusion index remaining at or below 50.0 percent since February.
  • The coincident index, a measure of current economic activity, also increased in May, following a flat period since the beginning of 2003. The leading index does not yet definitively signal significant gains in economic growth later this year. However, after three months of increases in the leading index, it seems more likely that the upward trend in the economy will continue.

Leading Indicators. Four of the eight components in the leading index increased in May. The positive contributors to the index — in order from the largest positive contributor to the smallest — are money supply*, (inverted) “medium term” government bond yield, gross operating surplus*, and building approvals*. Three of the eight components of the leading index decreased in May. The negative contributors to the index — in order from the largest negative contributor to the smallest — are rural goods exports*, yield spread, and sales to inventories ratio*. Share prices were unchanged.

With an increase in May, the leading index now stands at 149.2 (1990=100). Based on revised data, this index increased 0.3 percent in April and increased 0.3 percent in March. During the six-month span through May, the leading index increased 0.4 percent, and three of the eight components increased (diffusion index, six-month span equals 37.5 percent).

Coincident Indicators. Three of the five components in the coincident index increased in May. The increases - in order from the largest positive contributor to the smallest – occurred in employed persons, the (inverted) unemployment rate, and household gross disposable income*. Retail trade* and industrial production* were unchanged.

With an increase of 0.2 percent in May, the coincident index now stands at 114.1 (1990=100). Based on revised data, this index was flat in April and decreased 0.1 percent in March. During the six-month period through May, the coincident index increased 0.4 percent, with three components in the series making positive contributions (diffusion index, six-month span equals 60.0 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 July 22, 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 and household disposable income. CPI was used to deflate 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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