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Benchmark Revisions - May 2008

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Released: Thursday, October 23, 2008

The Conference Board announced today that the leading index for Mexico decreased 0.9 percent and the coincident index decreased 0.2 percent in August.

  • The leading index declined substantially in August as the oil price, the construction component of industrial production and the stock price index components all made very large negative contributions. As a result, since February, the six-month growth rate of the leading index has slowed to 2.0 percent (about a 4.1 percent annual rate), which is below the 5.3 percent annual rate that prevailed between August 2007 and February 2008. In addition, the strengths and weaknesses among the leading indicators have remained balanced in recent months.
  • The coincident index, a measure of current economic activity, also declined in August, the fourth decline in the past six months. In August, employment, as measured by total IMSS beneficiaries, was the largest negative contributor. The six-month growth rate of the coincident index fell to - 0.8 percent (about a -1.5 percent annual rate), down sharply from the 5.0 percent annual rate of growth that prevailed for the previous six-month period ending in February. However, the strengths among the coincident indicators have remained slightly more widespread than weaknesses over the last six months.
  • After declining in late 2007 through January of this year, the leading index resumed growing in February; however, this growth has been moderate and volatile. At the same time, the coincident index has been fluctuating around an essentially flat trend, and its six-month growth rate has become negative for the first time in three years. Meanwhile, real GDP grew at a 0.6 percent annual rate in the second quarter after a -0.5 percent annual rate in the first quarter of 2008. Taken together, the recent behavior of the composite indexes so far suggests that slow economic growth should continue 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 largest positive contributor to the smallest one — are net insufficient inventories and the (inverted) real exchange rate. The negative contributors to the index — from the largest negative contributor to the smallest one — are the US refiners' acquisition cost of domestic and imported crude oil, the industrial production construction component, stock prices, and the (inverted) federal funds rate.

With the 0.9 percent decrease in August, the leading index now stands at 171.9 (1990=100). Based on revised data, this index increased 0.1 percent in July and increased 0.2 percent in June. During the six-month span through August, the index increased 2.0 percent, with three of the six components increasing (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. None of the three components that make up the coincident index increased in August. The number of people employed (measured by total IMSS beneficiaries), industrial production, and retail sales* declined in August.

With the decrease of 0.2 percent in August, the coincident index now stands at 169.1 (1990=100). Based on revised data, this index decreased 0.5 percent in July and increased 0.9 percent in June. During the six-month span through August, the index decreased -0.8 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. October 21, 2008. Some series are estimated as noted below.

NOTES: The series in the coincident index based on The Conference Board estimates include 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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