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Benchmark Revisions - January 2008

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Released: Wednesday, September 24, 2008

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

  • The leading index was unchanged in July, following four consecutive monthly increases. Index levels were revised up for February through June as second quarter data for the sales-to-inventories ratio and gross operating surplus components became available. In July, real money supply contributed positively to the leading index, while share prices, the yield spread, rural goods exports, and building approvals all made negative contributions. The leading index increased 2.6 percent (a 5.2 percent annual rate) from January to July 2008, in line with the growth rate for the previous six-month period. However, the weaknesses among the leading indicators have become slightly more widespread than the strengths over the past six months.
  • The coincident index increased modestly in July. The six-month growth rate of the index stands at 0.6 percent (a 1.2 percent annual rate) between January and July 2008, slightly slower than the increase of 0.8 percent (about a 1.7 percent annual rate) during the previous six-month period ending in January. In addition, the strengths among the coincident indicators have remained widespread in recent months.
  • The leading index rose sharply in the second quarter but the weaknesses among the leading indicators were more widespread, and, in July, the index remained unchanged. While the coincident index has continued growing on a general upward trend since the beginning of 2006, its growth has been slowing moderately over the past year. At the same time, real GDP expanded at an average annual rate of 1.9 percent in the first half of 2008, well below the 3.6 percent average annual rate of growth in the second half of 2007. Taken together, the recent behavior of the composite indexes suggests that economic growth will remain slow in the near term.

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

With the leading index remaining unchanged in July, it now stands at 190.4 (1990=100). Based on revised data, this index increased 0.5 percent in June and increased 0.9 percent in May. During the six-month period through July, the leading index increased 2.6 percent, and three of the seven components increased (diffusion index, six-month span equals 42.9 percent).

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

With the increase of 0.2 percent in July, the coincident index now stands at 145.5 (1990=100). Based on revised data, this index decreased 0.1 percent in June and remained unchanged in May. During the six-month period through July, the coincident index increased 0.6 percent, with three of the four components in the series 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 September 22, 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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