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Benchmark Revisions - January 2008

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Released: Thursday, March 22, 2007

The Conference Board announced today that the leading index for Australia declined 0.2 percent and the coincident index increased 0.1 percent in January.

  • The leading index fell slightly in January as a result of a very large negative contribution from the rural goods exports component despite increases in almost all other components. With January's decrease - the first in the last six months, the six-month growth rate of the leading index has slowed to 1.3 percent (a 2.6 percent annual rate), down from about a 2.7 percent change in August 2006 ( slightly over 5.5 percent annual rate). In addition, the strengths and weaknesses among the leading indicators have continued to be somewhat balanced in recent months.
  • The coincident index increased slightly again in January. The growth rate of this measure of current economic activity has increased steadily throughout the first half of 2006, and stabilized around 2.0 percent annual rate in the second half. The strengths among the coincident indicators have also been consistently very widespread. At the same time, real GDP growth picked up to a 4.2 percent annual rate in the fourth quarter of 2006 (a 2.8 percent average annual rate in the second half of the year), from the 1.0 — 3.5 percent rate range it was fluctuating in during the previous five quarters. The behavior of the leading index in recent months suggests that the economy is likely to grow at a moderate pace in the near term.

LEADING INDICATORS. Six of the eight components in the leading index increased in January. The positive contributors to the index — in order from the largest positive contributor to the smallest — are money supply*, building approvals*, gross operating surplus*, the sales to inventories ratio*,share prices, and yield spread. Rural goods exports* declined, while the (inverted) "medium-term" government bond yield remained unchanged in January.

With the 0.2 percent decrease in January, the leading index now stands at 166.3 (1990=100). Based on revised data, this index increased 0.2 percent in December and increased 0.4 percent in November. During the six-month period through January, the leading index increased 1.3 percent, and four of the eight components increased (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Four of the five components in the coincident index increased in January. The increases — in order from the largest positive contributor to the smallest — occurred in retail trade, the (inverted) unemployment rate, household gross disposable income* and industrial production*. Employed persons declined in January.

With the increase of 0.1 percent in January, the coincident index now stands at 120.8 (1990=100). Based on revised data, this index increased 0.2 percent in both December and November. During the six-month period through January, the coincident index increased 0.8 percent, with all five components in the series making positive contributions (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 March 21, 2007. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates are sales to inventory ratio and gross operating surplus for private non-financial corporations, the implicit price index used to deflate rural goods exports and building approvals, and the CPI used to deflate money supply M3. Series in the coincident index that are based on The Conference Board estimates are industrial production and household disposable income. CPI was used to deflate retail trade.

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

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