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Benchmark Revisions - May 2008

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Released: Thursday, July 24, 2008

The Conference Board announced today that the leading index for Mexico declined 0.2 percent and the coincident index decreased 0.6 percent in May.

  • The leading index declined slightly in May following a very strong gain in April, and index levels from January to April were revised modestly upwards due to data revisions for the net insufficient inventories, oil prices, and industrial production (construction) components. In May, net insufficient inventories declined for the first time since January, making a large negative contribution to the index, more than offsetting the large positive contributions from oil prices and the stock price index. Since November, the leading index has increased by 3.9 percent (about a 7.9 percent annual rate), in line with growth over the six-month period from May 2007 to November 2007. In addition, the strengths among the leading indicators have been more widespread than the weaknesses in recent months.
  • The coincident index declined in May, after a large increase in April. Between November 2007 and May 2008, the coincident index declined by 0.1 percent (about a -0.2 percent annual rate), which is sharply below the 6.0 percent annual rate of growth that prevailed over the six-month period from May 2007 to November 2007. Although declining industrial production has been making negative contributions to the coincident index in recent months, they have been offset by positive contributions from employment* and retail sales. In addition, the strengths among the coincident indicators have remained somewhat more widespread than weaknesses.
  • The leading index grew steadily throughout most of 2007, and after declining late in 2007 through early this year, the index has resumed growing. At the same time, the coincident index has been fluctuating around an essentially flat trend since October 2007, while real GDP grew at about a 2.1 percent annual rate in the first quarter of 2008, down from a 4.2 percent average annual rate for the third and fourth quarters of 2007. Taken together, the recent behavior of the leading and coincident indexes suggests that the economy should continue expanding at a moderate pace in the near term.

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

With the 0.2 percent decrease in May, the leading index now stands at 174.3 (1990=100). Based on revised data, this index increased 2.7 percent in April and increased 1.0 percent in March. During the six-month span through May, the index increased 3.9 percent, with four of the six components increasing (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS. Two of the three components that make up the coincident index increased in May. The positive contributors — from the largest positive contributor to the smallest one — are number of people employed (measured by IMSS beneficiaries)* and retail sales*. Industrial production declined in May.

With the decrease of 0.6 percent in May, the coincident index now stands at 168.5 (1990=100). Based on revised data, this index increased 0.7 percent in April and decreased 0.7 percent in March. During the six-month span through May, the index decreased -0.1 percent, with two of the three components increasing (diffusion index, six-month span equals 66.7 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. July 22, 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 retail sales and employment.

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

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