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Benchmark Revisions - January 2008

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Released: Monday, November 24, 2008

The Conference Board announced today that the leading index for Australia declined 0.3 percent and the coincident index remained unchanged in September.

  • The leading index declined in September, the first decrease in seven months. Share prices, building approvals, the yield spread and rural goods exports all made large negative contributions to the index this month, more than offsetting the continued large increase in real money supply. The leading index increased 2.9 percent (a 5.9 percent annual rate) between March and September 2008, modestly faster than the growth of 1.9 percent (a 3.8 percent annual rate) during the previous six months. However, the weaknesses among the leading indicators have become more widespread than the strengths in recent months.
  • The coincident index remained unchanged in September, and the strengths among its components have remained fairly widespread. Employment declined in September, following three consecutive monthly gains. The six-month change in the coincident index has fallen to 0.4 percent (a 0.8 percent annual rate) for the six-month period ending in September, down from 0.7 percent (a 1.4 percent annual rate) for the previous six-month period. Meanwhile, real GDP growth slowed to a 1.9 percent average annual rate for the first half of 2008, down from a 3.6 percent average annual rate in the second half of 2007.
  • The leading index has been generally increasing this year, but its growth has moderated slightly during the third quarter, while the weaknesses among its components have become somewhat more widespread. The coincident index, a measure of current economic activity, has been on a rising trend since early 2006, albeit at a gradually slower pace since the fourth quarter of last year. Taken together, the recent behavior of the composite indexes continues to suggest slow economic growth in the near term.

LEADING INDICATORS. Three of the seven 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*, gross operating surplus* and the sales to inventories ratio*. Share prices, building approvals*, the yield spread, and rural goods exports* declined.

With the 0.3 percent decrease in September, the leading index now stands at 191.6 (1990=100). Based on revised data, this index increased 0.5 percent in August and increased 0.4 percent in July. During the six-month period through September, the leading index increased 2.9 percent, and three of the seven components increased (diffusion index, six-month span equals 42.9 percent).

COINCIDENT INDICATORS. Two of the four components in the coincident index increased in September. The increases — in order from the larger positive contributor to the smallest — occurred in household gross disposable income* and retail trade. Employed persons and industrial production* declined in September.

Remaining unchanged in September, the coincident index now stands at 145.6 (1990=100). Based on revised data, this index increased 0.1 percent in August and increased 0.2 percent in July. During the six-month period through September, the coincident index increased 0.4 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 November 21, 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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