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Benchmark Revisions - January 2008

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Released: Monday, April 28, 2008

The Conference Board announced today that the leading index for Australia declined 0.2 percent and the coincident index increased 0.1 percent in February.

  • The leading index declined for the third consecutive month in February. Building approvals, share prices and the yield spread continued to make negative contributions to the index this month, more than offsetting positive contributions from money supply (adjusted for inflation) and rural goods exports. As a result, the six-month growth rate in the leading index has slowed to 1.8 percent (a 3.6 percent annual rate), down from 2.6 percent (a 5.3 percent annual rate) in the six-month period from June 2007 to December 2007. In addition, the strengths among the leading indicators have become less widespread in recent months.
  • The coincident index increased in February, the third increase in the past four months. Employment continued to make the largest positive contribution to the coincident index, more than offsetting negative contributions from the remaining components in recent months. The six-month growth rate in the coincident index has continued to slow, decreasing to 0.2 percent (a 0.4 percent annual rate) from August 2007 to February 2008, down sharply from 2.0 percent (about a 4.0 percent annual rate) from February to August 2007.
  • The leading index has declined moderately in early 2008, after growing at a fairly strong pace during the second half of 2007, and the strengths among its components have become less widespread. Meanwhile, the coincident index, a measure of current economic activity, has marginally increased since the middle of 2007, after growing steadily over the previous year. Real GDP growth slowed to a 2.4 percent annual rate in the fourth quarter of 2007, down from an average annual rate of 3.9 percent for the second and third quarters. The current behavior of the composite indexes so far suggests that a more moderate pace of economic growth is likely to continue in the near term.

LEADING INDICATORS. Three of the seven components in the leading index increased in February. The positive contributors to the index — in order from the largest positive contributor to the smallest — are money supply*, rural goods exports*, and gross operating surplus*. Building approvals*, the yield spread, and share prices declined, while the sales to inventories ratio* remained unchanged in February.

With the 0.2 percent decrease in February, the leading index now stands at 184.8 (1990=100). Based on revised data, this index declined 0.5 percent in January and declined 0.1 percent in December. During the six-month period through February, the leading index increased 1.8 percent, and four of the seven components increased (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. One of the four components in the coincident index increased in February. The increase occurred in employed persons. Retail trade, household gross disposable income*, and industrial production* declined in February.

With the increase of 0.1 percent in February, the coincident index now stands at 144.3 (1990=100). Based on revised data, this index remained unchanged in January and increased 0.1 percent in December. During the six-month period through February, the coincident index increased 0.2 percent, with one of four components in the series making a positive contribution (diffusion index, six-month span equals 25.0 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 April 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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