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Benchmark Revisions - January 2008

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Released: Wednesday, February 27, 2008

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

  • The leading index increased for the fifth consecutive month in December. Rural goods exports and real money supply provided the largest positive contributions to the index this month, while share prices, building approvals and the yield spread contributed negatively to the index. The six-month growth rate of the leading index has increased in recent months, rising to 2.8 percent (a 5.6 percent annual rate) from June to December, up from the average six-month growth rate of 0.8 percent in the third quarter (about a 1.6 percent annual rate). In addition, the strengths among the leading indicators were balanced to slightly more widespread than the weaknesses during the second half of 2007.
  • The coincident index increased again in December, driven primarily by the large positive contribution from employed persons. The six-month growth rate of the coincident index has slowed to 1.3 percent (about a 2.7 percent annual rate) from June to December, down from the average six-month growth rate of 1.8 percent in the third quarter (about a 3.6 percent annual rate), but the strengths among its components have remained fairly widespread in recent months.
  • After a brief pause in the first half of 2007, the leading index resumed rising in the second half of the year, although the strengths among its components have become slightly less widespread. Meanwhile, the coincident index, a measure of current economic activity, continues to be on a modest upward trend that began in early 2006. In addition, real GDP grew at an average annual rate of about 4.1 percent in the first three quarters of 2007. The current behavior of the composite indexes suggests that moderately strong economic activity will likely continue in the near term.

LEADING INDICATORS. Four of the seven components in the leading index increased in December. The positive contributors to the index — in order from the largest positive contributor to the smallest — are rural goods exports*, money supply*, gross operating surplus*, and the sales to inventories ratio*. Share prices, building approvals* and the yield spread declined.

With the 0.2 percent increase in December, the leading index now stands at 186.3 (1990=100). Based on revised data, this index increased 0.6 percent in November and increased 1.1 percent in October. During the six-month period through December, the leading index increased 2.8 percent, and four of the seven components increased (diffusion index, six-month span equals 64.3 percent).

COINCIDENT INDICATORS. Three of the four components in the coincident index increased in December. The increases — in order from the largest positive contributor to the smallest — occurred in employed persons, household gross disposable income*, and retail trade. Industrial production* declined in December.

With the increase of 0.2 percent in December, the coincident index now stands at 144.9 (1990=100). Based on revised data, this index increased 0.3 percent in November and increased 0.1 percent in October. During the six-month period through December, the coincident index increased 1.3 percent, with three of the four components making positive contributions (diffusion index, six-month span equals 75.0 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 February 25, 2008. 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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