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Released: Wednesday, October 18, 2006

The Conference Board announced today that the leading index for Mexico declined 0.5 percent and the coincident index declined 0.1 percent in August.

  • The leading index fell in August, with net insufficient inventories being the major contribution to this month's decline in the leading index. Despite this month's decline, the growth rate of the leading index has continued to fluctuate around a 5.0 — 6.0 percent annual rate in recent months, up from earlier this year but still below the rapid growth of 14 percent through the third quarter of 2005. In addition, the strengths among the leading indicators have become somewhat more widespread in recent months.
  • The coincident index declined slightly in August, but it is still on a flat to slightly rising trend. At the same time, real GDP grew at a 5.7 percent average annual rate in the first half of 2006 (including a 4.5 percent rate in the second quarter), up from the 3.9 percent average rate over the previous two quarters. Despite short-term volatility, the recent behavior in the leading index suggests that economic growth is likely to remain moderate to strong in the near term.

LEADING INDICATORS. Two of the six components that make up the leading index increased in August. The positive contributors to the index-from the larger positive contributor to the smaller one-are the (inverted) real exchange rate and stock prices. Net insufficient inventories, the US refiners' acquisition cost of domestic and imported crude oil, and the industrial production construction component* decreased, while the (inverted) federal funds rate remained unchanged in August.

With the 0.5 percent decrease in August, the leading index now stands at 161.6 (1990=100). Based on revised data, this index increased 0.9 percent in July and declined 0.1 percent in June. During the six-month span through August, the index increased 3.2 percent, with five of the six components increasing (diffusion index, six-month span equals 83.3 percent).

COINCIDENT INDICATORS. Two of the four components that make up the coincident index increased in August. The positive contributors — from the larger positive contributor to the smaller one — are number of people employed (measured by IMSS beneficiaries)* and industrial production. The (inverted) unemployment rate declined, while retail sales* remained unchanged in August.

With the decrease of 0.1 percent in August, the coincident index now stands at 118.1 (1990=100). Based on revised data, this index decreased 0.1 percent in July and increased 0.3 percent in June. During the six-month span through August, the index increased 0.8 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).

DATA AVAILABILITY. The data series used to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. October 17, 2006. Some series are estimated as noted below.

NOTES: Series in the leading index based on The Conference Board estimates include industrial production — construction component. The series in the coincident index based on The Conference Board estimates include retail sales and unemployment rate.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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