Global Business Cycle Indicators
Press Release Archive
Released: Thursday, July 19, 2007
The Conference Board announced today that the U.S. leading index decreased 0.3 percent, the coincident index increased 0.2 percent and the lagging index increased 0.5 percent in June.
- The leading index decreased in June after increasing in May, and it has declined in four of the last six months. Housing permits made the largest negative contribution to the leading index in June, followed by initial claims for unemployment insurance (inverted) and consumer expectations. The leading index declined 0.7 percent from December to June (a -1.3 percent annual rate).
- The coincident index increased again in June. From December to June, the coincident index rose by 0.6 percent (a 1.3 percent annual rate). In June, industrial production made the largest positive contribution followed by personal income less transfer payments* and employment. The strengths among the coincident indicators have been very widespread in recent months despite a slow down in its growth rate from an average annual rate of about 2.5 percent in 2006.
- The leading index has been fluctuating around an essentially flat trend since January, and the number of decreasing components has been slightly more than the number of components increasing in recent months. At the same time, real GDP grew only at a 0.7 percent annual rate in the first quarter of 2007, slowing down from a 2.5 percent rate in the fourth quarter of 2006. The performance of the leading index so far in the first half of 2007 continued to be mixed with offsetting increases and decreases, and suggests that economic growth is likely to continue, but it is likely to be at a slow pace in the near term.
LEADING INDICATORS. Three of the ten indicators that make up the leading index increased in June. The positive contributors - beginning with the largest positive contributor - were average weekly manufacturing hours, manufacturers' new orders for nondefense capital goods*, and stock prices. The negative contributors - beginning with the largest negative contributor - were building permits, average weekly initial claims for unemployment insurance (inverted), index of consumer expectations, vendor performance, and interest rate spread. The manufacturers' new orders for consumer goods and materials* and real money supply* held steady in June.
The leading index now stands at 137.5 (1996=100). Based on revised data, this index increased 0.2 percent in May and decreased 0.2 percent in April. During the six-month span through June, the leading index decreased 0.7 percent, with four out of ten components advancing (diffusion index, six-month span equals forty percent).
COINCIDENT INDICATORS. All four indicators that make up the coincident index increased in June. The positive contributors to the index - beginning with the largest positive contributor - were industrial production, personal income less transfer payments*, employees on nonagricultural payrolls, and manufacturing and trade sales*.
The coincident index now stands at 124.2 (1996=100). This index increased 0.1 percent in May and increased 0.2 percent in April. During the six-month period through June, the coincident index increased 0.6 percent.
LAGGING INDICATORS. The lagging index stands at 129.2 (1996=100) in June, with one of the seven components advancing. The positive contributor to the index was commercial and industrial loans outstanding*. The negative contributors - beginning with the largest negative contributor - were change in labor cost per unit of output*, average duration of unemployment (inverted), and change in CPI for services. The ratio of manufacturing and trade inventories to sales*, average prime rate charged by banks, and ratio of consumer installment credit to personal income* held steady in June. Based on revised data, the lagging index increased 0.3 percent in May and increased 0.2 percent in April.
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 July 18, 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.