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Benchmark Revisions - January 2008

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Released: Monday, August 28, 2006

The Conference Board announced today that the leading index for Australia increased 0.4 percent and the coincident index increased 0.2 percent in June.

  • The leading index increased in June following a small decline in May, and there were large upward revisions to the previous three months. Real money supply and building approvals were the largest positive contributors to the leading index in the last several months. With June's increase, the growth rate of the leading index continued to fluctuate in the range of 2.5 - 3.5 percent (annual rate) in recent months, still below the most recent high of almost 5.0 percent reached in mid-2005. The strengths among the leading indicators have been more widespread than weaknesses in recent months.
  • The coincident index increased slightly again in June. Employment and retail trade were the main positive contributors to the coincident index over the last six months, whereas the industrial production and household gross disposable income components were essentially flat over this period. At the same time, real GDP growth picked up to a 3.5 percent annual rate in the first quarter of 2006, up from a 1.9 percent average annual rate in the second half of 2005. The current behavior of the leading index suggests that moderate economic growth is likely to continue in the near term.

LEADING INDICATORS. Six of the eight components in the leading index increased in June. The positive contributors to the index - in order from the largest positive contributor to the smallest - are building approvals*, money supply*, rural goods exports*, gross operating surplus*, share prices, and the sales to inventories ratio*. The (inverted) "medium-term" government bond yield and yield spread declined in June.

With the 0.4 percent increase in June, the leading index now stands at 161.9 (1990=100). Based on revised data, this index declined 0.1 percent in May and increased 0.2 percent in April. During the six-month period through June, the leading index increased 1.3 percent, and six of the eight components increased (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS. Four of the five components in the coincident index increased in June. The increases - in order from the largest positive contributor to the smallest - occurred in employed persons, retail trade, household gross disposable income*, and industrial production*. The unemployment rate remained unchanged in June. * See notes under data availability.

With the increase of 0.2 percent in June, the coincident index now stands at 119.4 (1990=100). Based on revised data, this index increased 0.2 percent in May and remained unchanged in April. During the six-month period through June, the coincident index increased 0.7 percent, with three of the five 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" 10 A.M. ET on August 24, 2006. 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, and the CPI used to deflate money supply M3. 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.

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

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