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Benchmark Revisions - May 2006

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Released: Wednesday, December 13, 2006

The Conference Board reports today that the leading index for France declined 0.4 percent and the coincident index increased 0.1 percent in October.

  • The leading index decreased in October, the first decrease since January. From April to October, the leading index grew 0.7 percent (about a 1.4 percent annual rate), down from the 3.0 to 3.5 percent average annual growth rate in the first half of the year. New unemployment insurance claims (inverted) made a very large negative contribution to the leading index in October. In addition, the strengths and weaknesses among the leading indicators have become somewhat balanced in recent months.
  • The coincident index increased slightly in October, following a slight decrease in September. Despite some short-term volatility, this index of current economic activity has been on a slightly rising trend since mid-2003, but its growth has moderated slightly (from about a 2.0 percent annual growth rate at the beginning of 2006 down to less than 1.0 percent growth) in recent months.
  • The growth rate of the leading index picked up through mid-2006, but it has moderated in recent months. At the same time, real GDP decreased at a 0.1 percent annual rate in the third quarter of 2006, following a 3.4 percent annual rate in the first half of 2006. The recent behavior of the leading index so far still suggests that economic growth is likely to continue, but at a slow to moderate rate in the near term.

LEADING INDICATORS. Four of the seven components of the leading index increased in October. The positive contributors to the index — in order from the largest positive contributor to the smallest — are production expectations, the stock price index, the yield spread, and the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing*. The negative contributors to the index — beginning with the largest negative contributor — are the inverted new unemployment claims, industrial new orders, and building permits (residential).

With the decrease of 0.4 percent in October, the leading index now stands at 129.2 (1990=100). Based on revised data, this index increased 0.2 percent in September and increased 0.1 percent in August. During the six-month span through October, the leading index increased 0.7 percent, and three of the seven components increased (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Three of the four components of the coincident index increased in October. The positive contributors to the index were wage and salaries*, personal consumption, and employment*. Industrial production declined in October.

Please visit the web site of our research associate in France: http://www.rexecode.fr/index.jsv

With the increase of 0.1 percent in October, the coincident index now stands at 119.9 (1990=100). Based on revised data, this index decreased 0.1 percent in September and increased 0.2 percent in August. During the six-month period through October, the coincident index increased 0.3 percent, with all four series making a positive contribution (diffusion index, six-month span equals 100.0 percent).

DATA AVAILABILITY. The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on December 11, 2006. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates are ratio deflator of manufacturing value added to unit labor cost in manufacturing. Series in the coincident index that are based on The Conference Board estimates are number of employees and wage and salaries.

With the May 2006 release the FRANCE LEADING ECONOMIC INDICATORS AND RELATED COMPOSITE INDEXES underwent a benchmark revision. For more information on these benchmark revisions look here on our website at www.conference-board.org/economics/bci/update.cfm?cid=3.

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

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