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Benchmark Revisions - January 2008

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Released: Tuesday, November 20, 2007

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

  • The leading index continued to increase in September. Money supply again provided the largest positive contribution to the index, while the financial components -- (inverted) medium-term government bond yield and yield spread -- contributed negatively to the index this month. The leading index increased 2.2 percent (a 4.5 percent annual rate) from March to September, slightly slower than the six- month growth rates of 2.5 percent to 2.8 percent (about a 5.0 percent to 5.6 percent annual rate) that had prevailed during the second quarter. However, the strengths among its components have remained fairly widespread throughout this period.
  • The coincident index continued to rise steadily in September. Except for industrial production which stayed unchanged this month, all the coincident indicators made small positive contributions to the index. The six- month growth rate of the index has slowed modestly to 0.9 percent (a 1.8 percent annual rate) from 1.2 percent (a 2.3 percent annual rate) at the end of the first quarter, but the strengths among its components remain very widespread.
  • The leading and coincident indexes have continued to increase through the third quarter, albeit at a pace that is modestly slower than the first half of the year. Real GDP grew at a 5.2 percent annual rate in the first half of 2007, which was up from a 3.5 percent annual rate in the second half of 2006 and a 2.5 percent annual rate in the first half of 2006. The current behavior of the leading and coincident indexes suggests that moderate to strong economic growth will likely continue in the near term.

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

With the 0.5 percent increase in September, the leading index now stands at 173.8 (1990=100). Based on revised data, this index increased 0.7 percent in August and increased 0.4 percent in July. During the six-month period through September, the leading index increased 2.2 percent, and five of the eight components increased (diffusion index, six-month span equals 68.8 percent).

COINCIDENT INDICATORS. Four of the five components in the coincident index increased in September. The increases — in order from the largest positive contributor to the smallest — occurred in the (inverted) unemployment rate, retail trade, household gross disposable income* and employed persons. Industrial production remained unchanged in September.

With the increase of 0.2 percent in September, the coincident index now stands at 122.6 (1990=100). Based on revised data, this index increased 0.2 percent in August and increased 0.1 percent in July. During the six-month period through September, the coincident index increased 0.9 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 November 19, 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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