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Benchmark Revisions - January 2008

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Released: Tuesday, July 24, 2007

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

  • The leading index increased slightly again in May, and there were large upward revisions to the leading index level in the previous months. Real money supply (M3), gross operating surplus (private, non-financial corporations), and stock prices continued to make large positive contributions to the leading index in May. With May's increase, the six-month growth rate of the leading index was at 3.1 percent from November to May (a 6.4 percent annual rate), up from about 2.2 percent in December (a 4.5 percent annual rate). In addition, the strengths among the leading indicators have been more widespread than weaknesses in recent months.
  • The coincident index also increased slightly in May, continuing to grow on an upward trend following a brief slowdown in early 2006. Moreover, the strengths among the components in the coincident index have also remained widespread. At the same time, real GDP grew at a 6.6 percent annual rate in the first quarter of 2007, up from the 3.1 percent average annual rate over the previous two quarters. The recent behavior of the coincident and leading indexes still suggests moderate to strong economic growth should continue in the near term.

LEADING INDICATORS. Six 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 gross operating surplus*, money supply*, share prices, the sales to inventories ratio*, rural goods exports*, and yield spread. Building approvals* and the (inverted) "medium-term" government bond yield declined in May.

With the 0.2 percent increase in May, the leading index now stands at 171.2 (1990=100). Based on revised data, this index increased 0.2 percent in April and increased 0.5 percent in March. During the six-month period through May, the leading index increased 3.1 percent, and six of the eight components increased (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS. Two of the five components in the coincident index increased in May. The increases — in order from the larger positive contributor to the smaller — occurred in employed persons and household gross disposable income*. Retail trade declined, while industrial production and the inverted unemployment rate remained unchanged in May.

With the increase of 0.2 percent in May, the coincident index now stands at 121.8 (1990=100). Based on revised data, this index increased 0.1 percent in April and increased 0.2 percent in March. During the six-month period through May, the coincident index increased 1.2 percent, with all five components in the series making positive contributions (diffusion index, six-month span equals 100.0 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 July 24, 2007. 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.

Effective with the July 24, 2007 release, a programming error in the calculation of the Building Approvals (Thousands, '96-'97 A$, SA, 3MA) component of the leading index in the previous release (June 2007) has been corrected. The long-term cyclical behavior of the leading index was not affected by either the calculation error or its correction, but the monthly contributions of the component and the level of the leading index in the last six months were revised.

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

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