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Benchmark Revisions - May 2008

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Released: Tuesday, April 15, 2008

Next month's release of the Mexico LEADING ECONOMIC INDICATORS AND RELATED COMPOSITE INDEXES will incorporate annual benchmark revisions to the composite indexes which will bring them up to date with revisions in the source data. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the annual benchmark revision is made and the entire histories of the indexes are recomputed. The benchmark revisions will also introduce methodological changes to both the coincident and leading indexes. For more details, please see page 3 of the pdf.

The Conference Board announced today that the leading index for Mexico increased 1.1 percent and the coincident index increased 0.1 percent in February.

  • The leading index increased strongly in February after declining during the previous three months. In February, net insufficient inventories, the real inverted exchange rate and US refiners' acquisition cost of crude oil made large positive contributions. With February's increase, the leading index rose 2.0 percent (about a 4.0 percent annual rate) between August 2007 and February 2008. This was well below the 4.2 percent (about an 8.5 percent annual rate) growth rate that prevailed during the previous six-month period. In addition, the weaknesses among the leading indicators have been more widespread than the strengths in recent months.
  • The coincident index, a measure of current economic activity, increased modestly in February. Strong positive contributions made by industrial production and employment offset the negative contribution made by the unemployment rate (inverted). Since August 2007, the coincident index has increased by 0.3 percent (about a 0.5 percent annual rate), down from the 1.1 percent increase (about a 2.2 percent annual rate) for the period between February 2007 and August 2007. In addition, the weaknesses among the coincident indicators have become more widespread in recent months.
  • Following a slight decline in the second half of 2006, the leading index grew steadily during most of 2007, but has declined modestly since October 2007. At the same time, the coincident index continued to increase since the beginning of 2007, albeit at a slower rate, and it is now at the same level as in October 2007. Real GDP growth in the fourth quarter of 2007 was about a 3.0 percent annual rate, down from a 5.3 percent average annual rate in the second and third quarters. The recent behavior of the leading and coincident indexes suggests that slow to moderate economic growth will continue in the near term.

LEADING INDICATORS. Five of the six components that make up the leading index increased in February. The positive contributors to the index — from the largest positive contributor to the smallest one — are net insufficient inventories, the (inverted) real exchange rate, the US refiners' acquisition cost of domestic and imported crude oil, stock prices, and the industrial production construction component. The (inverted) federal funds rate remained unchanged.

With the 1.1 percent increase in February, the leading index now stands at 168.7 (1990=100). Based on revised data, this index declined 1.2 percent in January and declined 0.7 percent in December. During the six-month span through February, the index increased 2.0 percent, with two of the six components increasing (diffusion index, six-month span equals 33.3 percent).

COINCIDENT INDICATORS. Two of the four components that make up the coincident index increased in February. The positive contributors — from the largest positive contributor to the smallest one — are industrial production, and number of people employed (measured by IMSS beneficiaries)*. The negative contributors — from the largest negative contributor to the smallest — are the (inverted) unemployment rate, and retail sales*.

With the increase of 0.1 percent in February, the coincident index now stands at 119.8 (1990=100). Based on revised data, this index decreased 0.2 percent in January and remained unchanged in December. During the six-month span through February, the index increased 0.3 percent, with one of the four components increasing (diffusion index, six-month span equals 37.5 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. April 11, 2008. 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 industrial production and retail sales.

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

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