Global Business Cycle Indicators
Press Release Archive
Released: Tuesday, January 23, 2007
This month's release incorporates annual benchmark revisions to the composite indexes which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated every month, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the January release of each year when an annual benchmark revision is made and the indexes are recomputed.
Also, please note the revised calendar of release dates for U.S Leading Economic Indicators.
For more information, visit http://www.conference-board.org/economics/bci/.
The Conference Board announced today that the U.S. leading index increased 0.3 percent, the coincident index increased 0.2 percent and the lagging index increased 0.9 percent in December.
- The leading index increased in December, and the previous two small increases were revised down to a slight decrease in October and no change in November. From June to December, the leading index rose 0.1 percent (a 0.3 percent annual rate), but it is still 0.1 percent below its December 2005 level and the strengths among the leading indicators have not been very widespread. In December, negative contributions from the interest rate spread and index of consumer expectations were offset by large contributions from building permits and initial claims for unemployment insurance (inverted).
- The coincident index increased again in December. From June to December, this index of current economic activity grew at a 1.1 percent rate (a 2.1 percent annual rate). The strengths among the coincident indicators have been widespread in recent months.
- The growth rate of the leading index has improved slightly recently, but the index is still 0.4 percent below its most recent high in January 2006. At the same time, real GDP growth slowed to a 2.0 percent (annual) rate in the third quarter of 2006, following a 2.6 percent gain in the second quarter. The recent behavior of the leading index still suggests that slow to moderate economic growth is likely to continue in the near term.
LEADING INDICATORS. Six of the ten indicators that make up the leading index increased in December. The positive contributors — beginning with the largest positive contributor — were building permits, average weekly initial claims for unemployment insurance (inverted), real money supply* , stock prices, vendor performance and manufacturers' new orders for nondefense capital goods*. The negative contributors — beginning with the largest negative contributor — were interest rate spread and index of consumer expectations. The average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials* held steady in December.
The leading index now stands at 138.0 (1996=100). Based on revised data, this index remained unchanged in November and decreased 0.1 percent in October. During the six-month span through December, the leading index increased 0.1 percent, with four out of ten components advancing (diffusion index, six-month span equals forty percent).
COINCIDENT INDICATORS. All four of the indicators that make up the coincident index increased in December. The positive contributors to the index - beginning with the largest positive contributor - were employees on nonagricultural payrolls, industrial production, personal income less transfer payments* and manufacturing and trade sales*.
The coincident index now stands at 123.3 (1996=100). This index increased 0.2 percent in November and increased 0.2 percent in October. During the six-month period through December, the coincident index increased 1.1 percent.
LAGGING INDICATORS. The lagging index stands at 127.3 (1996=100) in December, with five of the seven components advancing. The positive contributors to the index — beginning with the largest positive contributor — were commercial and industrial loans outstanding*, average duration of unemployment (inverted), change in labor cost per unit of output*, ratio of consumer installment credit to personal income* and ratio of manufacturing and trade inventories to sales*. The average prime rate charged by banks and change in CPI for services* held steady in December. Based on revised data, the lagging index increased 0.6 percent in November and increased 0.1 percent in October.
DATA AVAILABILITY AND NOTES.
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 January 22, 2007. Some series are estimated as noted below.
* 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 used to deflate the 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, the consumer price index, and the personal consumption expenditure used to deflate commercial and industrial loans outstanding.
The procedure used to estimate the current month's personal consumption expenditure deflator (used in the calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month's consumer price index when it is available before the release of the U.S. Leading Economic Indicators.
Effective with the September 18, 2003 release, the method for calculating manufacturers' new orders for consumer goods and materials (A0M008) and manufacturers' new orders for nondefense capital goods (A0M027) has been revised. Both series are now constructed by deflating nominal aggregate new orders data instead of aggregating deflated industry level new orders data. Both the new and the old methods utilize appropriate producer price indices. This simplification remedies several issues raised by the recent conversion of industry data to the North American Classification System (NAICS), as well as several other issues, e.g. the treatment of semiconductor orders. While this simplification caused a slight shift in the levels of both new orders series, the growth rates were essentially the same. As a result, this simplification had no significant effect on the leading index.
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.