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Benchmark Revisions - January 2008

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Released: Thursday, October 25, 2007

The Conference Board announced today that the leading index for Australia increased 0.7 percent and the coincident index increased 0.2 percent in August.

  • The leading index increased again in August, and the strengths among its components remained slightly more widespread than the weaknesses. Most of the leading indicators contributed positively to the index this month, with money supply providing the largest positive contribution, as it has done so throughout the year. The six-month growth rate of the leading index has decelerated to 2.2 percent (a 4.4 percent annual rate) from 3.1 percent (a 6.3 percent annual rate) at the end of the first quarter, and the strengths among its components have become somewhat less widespread than the weaknesses during the past six months.
  • The coincident index also continued to increase in August. Similar to recent months, employed persons, retail trade and household gross disposable income made positive contributions to the index, while industrial production and the unemployment rate were unchanged in August. The coincident index increased 1.2 percent from February to August (a 2.3 percent annual rate), essentially the same growth rate since the beginning of the year. In addition, the strengths among its components continue to be very widespread.
  • Although there has been some gradual moderation in the growth rate of the leading index this year, both leading and coincident indexes remain on an uninterrupted upward trend that began in early 2006. At the same time, real GDP expanded at a 5.2 percent annual rate in the first half of the year (including a 3.8 percent annual rate for the second quarter). The recent behavior of the leading and coincident indexes suggests that economic activity will likely continue to expand at a moderate to strong pace in the near term.

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

With the 0.7 percent increase in August, the leading index now stands at 173.1 (1990=100). Based on revised data, this index increased 0.4 percent in July and increased 0.4 percent in June. During the six-month period through August, the leading index increased 2.2 percent, and four of the eight components increased (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Three of the five components in the coincident index increased in August. The increases — in order from the largest positive contributor to the smallest — occurred in employed persons, retail trade, and household gross disposable income*. The unemployment rate and industrial production were unchanged in August. With the increase of 0.2 percent in August, the coincident index now stands at 122.6 (1990=100). Based on revised data, this index increased 0.2 percent in July and increased 0.2 percent in June. During the six-month period through August, 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 October 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.

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

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