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Released: Monday, August 19, 2002

In light of substantial data revisions announced by the Bureau of Economic Analysis (BEA) in July, The Conference Board decided to undertake a mid-year benchmark of its composite economic indexes. This maintenance procedure, typically done in January, had no effect on the peak and trough dates of the composite indexes. However, in the coincident index, the data revisions increased the depth of the most recent recession. (Due to these revisions, month-to-month changes in the composite indexes are no longer comparable to those issued prior to this benchmark.)

The Conference Board announced today that the U.S. leading index decreased 0.4 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.1 percent in July.

  • Although the incorporated data revisions deepened the depth of the decline in the coincident index in the most recent recession, the decline of this index remains mild by historical standards. The decline from the peak of the coincident index in December 2000 to its trough in November 2001 is only 1.7 percent compared to an average decline of 3.3 percent from peak to trough in the previous six recessions.
  • Modest gains in the coincident index in the last five months reflect the slow pace of the economic recovery. To date, the pre-recession peak of the coincident index has not yet been reached.
  • Although the leading index declined in three of the last six months, its six-month diffusion index, which measures the proportion of the components that are rising, remains above 50 percent. This month’s decline in the leading index was primarily caused by weak equity markets and lower consumer expectations.

Leading Indicators. Six of the ten indicators that make up the leading index decreased in July. The negative contributors to the leading index - from the largest negative contributor to the smallest – were stock prices, average weekly manufacturing hours, index of consumer expectations, interest rate spread, vendor performance, and building permits. The four positive contributors to the index - beginning with the largest positive contributor - were real money supply*, manufacturers’ new orders for nondefense capital goods*, average weekly initial claims for unemployment insurance (inverted), and manufacturers’ new orders for consumer goods and materials*.

The leading index now stands at 111.7 (1996=100). This index decreased 0.2 percent in June and increased 0.6 percent in May. During the six-month span through July, the leading index decreased 0.1 percent, with six of the ten components advancing (diffusion index, six-month span equals 55 percent).

Coincident Indicators. Three of the four indicators that make up the coincident index increased in July. The largest contributor to the index was personal income less transfer payments*, followed by industrial production and manufacturing and trade sales*. Employees on nonagricultural payrolls held steady in July.

With the increase in July, the coincident index now stands at 115.0 (1996=100). This index increased 0.3 percent in June and increased 0.2 percent in May. During the six-month period through July, the coincident index increased 0.6 percent.

Lagging Indicators. The lagging index increased 0.1 percent to 100.7 (1996=100) in July. Two of the seven components of the lagging index increased in July. The positive contributors to the index – beginning with the larger positive contributor – were average duration of unemployment and change in labor cost per unit of output*. The two negative contributors to the index – beginning with the larger negative contributor – were commercial and industrial loans outstanding* and change in CPI for services. Ratio of consumer installment credit to personal income*, ratio of manufacturing and trade inventories to sales*, and average prime rate charged by banks held steady in July. The lagging index decreased 0.3 percent in June and in May.

Data Availability. The data series used by The Conference Board to compute the three composite indexes and reported in the tables in this release are those available "as of" 12 Noon on August 16, 2002. Some series are estimated as noted below.

*Notes: Series in the leading index that are based on The Conference Board estimates are manufacturers’ new orders for consumer goods and materials, manufacturers’ new orders for nondefense capital goods, and the personal consumption expenditure deflator for money supply. Series in the coincident index that are based on The Conference Board estimates are personal income less transfer payments and manufacturing and trade sales. Series in the lagging index that are based on The Conference Board estimates are inventories to sales ratio, consumer installment credit to income ratio, change in labor cost per unit of output, and the personal consumption expenditure deflator for commercial and industrial loans outstanding.

The next release is scheduled for September 23, 2002 at 10 A.M. ET.

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

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