Global Business Cycle Indicators
|Benchmark Revisions - November 2006|
Press Release Archive
Released: Thursday, March 6, 2008
The Conference Board reports today that the leading index for Japan decreased 0.4 percent and the coincident index decreased 0.2 percent in January.
- The leading index declined again in January, and has declined in ten of the last twelve months in the past year. Stock prices, the six-month growth rate of labor productivity, and index of overtime worked contributed largely to the declines to the index in January. With this month's decrease, the six-month growth rate of the leading index continued to fall, to a -3.0 percent from July 2007 to January 2008 (a -5.9 percent annual rate), down from about -1.0 percent (about a -2.0 percent annual rate) in January to July 2007, and the weaknesses among the leading indicators continued to be widespread than the strengths.
- The coincident index also declined in January. Industrial production and employment contributed negatively, more than offsetting positive contributions from wage and salary income and the real retail, wholesale, and manufacturing sales components. The six-month growth rate of the coincident index has slowed to a 0.6 percent rate from July 2007 to January 2008 (a 1.1 percent annual rate), but the strengths among the components remained fairly widespread over the past six months.
- The leading index has now declined 4.6 percent below its most recent high level of December 2006 and the weaknesses among its components have also become gradually more widespread. At the same time, real GDP grew at a 3.7 percent annual rate in the fourth quarter following a 1.3 percent rate in the third quarter. The current behavior of both leading and coincident indexes indicates increasing risks for further economic weakness, and suggests that economic activity is likely to be sluggish in the near term.
LEADING INDICATORS. Five of the ten components that make up the leading index increased in January. The positive contributors to the index — in order from the largest positive contributor to the smallest — include the new orders for machinery and construction component*, dwelling units started, the (inverted) business failures*, interest rate spread, and real money supply. The negative contributors — in order from the largest negative contributor to the smallest — include stock prices, the six month growth rate of labor productivity, the index of overtime worked, the Tankan business conditions survey, and real operating profits*.
With the decrease of 0.4 percent in January, the leading index now stands at 84.5 (1990=100). Based on revised data, this index decreased 0.4 percent in December and remained unchanged in November. During the six-month span through January, the index decreased 3.0 percent, and three of the ten components advanced (diffusion index, six-month span equals 30.0 percent).
COINCIDENT INDICATORS. Two of the four components that make up the coincident index decreased in January. The positive contributors to the index — in order from the larger positive contributor to the smaller — include the retail, wholesale, and manufacturing sales* component and wage and salary income*. Industrial production and number of employed persons declined in January.
With the decrease of 0.2 percent in January, the coincident index now stands at 109.1 (1990=100). Based on revised data, this index increased 0.1 percent in both December and November. During the six-month span through January, the index increased 0.6 percent, and three of the four components advanced (diffusion index, six-month span equals 75.0 percent).
DATA AVAILABILITY AND NOTES. The data series used to compute the two composite indexes reported in this release are those available "as of" 5:00 P.M. ET March 5, 2008. Some series are estimated as noted below.
* The series in the leading index that are based on The Conference Board estimates are real operating profits, new orders for machinery, and the six month growth rate of labor productivity. The series in the coincident index that are based on The Conference Board estimates are real manufacturing sales and wage and salary income.
NOTE: Since the July 2005 press release, Real Retail, Wholesale, and Manufacturing Sales has been used as a component of the coincident index. This series replaces the individual sales series previously used. Before the aggregation is done, the individual sales series is deflated to adjust for changes in the price levels. Real wholesale sales and real manufacturing sales are deflated with the wholesale price for manufacturing goods. (As part of this revision an error in the price index that was used to deflate manufacturing sales was also corrected.) Real retail sales are deflated with the consumer price index. The resulting three deflated series are added together to provide new real retail, wholesale, and manufacturing sales data. The Coincident Index is now more consistent with other measures of economic activity, such as industrial production and GDP (particularly after 2001).
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.