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Benchmark Revisions - January 2008

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Released: Monday, August 27, 2007

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

  • The leading index increased again in June. Real money supply (M3) and gross operating surplus (private, non-financial corporations) continued to make large positive contributions to the leading index, offsetting negative contributions from building approvals and rural goods exports in recent months. With this month's increase, the leading index grew at a 3.2 percent rate from December to June (a 6.5 percent annual rate), up from about 2.2 percent in December (a 4.5 percent annual rate). In addition, the number of components rising has been somewhat more than the number declining in recent months, suggesting the strength among the leading indicators is widespread.
  • The coincident index also increased in June, and retail trade made the largest positive contribution to the index this month. With June's gain, this index of current economic activity continued on its steady upward trend since early 2006, and the strength among the coincident indicators has been very 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 suggests moderate to strong economic growth should continue in the near term.

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

With the 0.4 percent increase in June, the leading index now stands at 172.2 (1990=100). Based on revised data, this index increased 0.3 percent in May and increased 0.4 percent in April. During the six-month period through June, the leading index increased 3.2 percent, and five of the eight components increased (diffusion index, six-month span equals 68.8 percent).

COINCIDENT INDICATORS. Three 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 retail trade, household gross disposable income*, and employed persons. The (inverted) unemployment rate declined, while industrial production was unchanged in June.

With the increase of 0.1 percent in June, the coincident index now stands at 122.2 (1990=100). Based on revised data, this index increased 0.2 percent in both May and April. During the six-month period through June, 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 August 27, 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.

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

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