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Benchmark Revisions - January 2008

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Released: Wednesday, October 29, 2008

The Conference Board announced today that the leading index for Australia increased 0.4 percent and the coincident index increased 0.1 percent in August.

  • The leading index increased for the sixth consecutive month in August. Money supply (adjusted for inflation), rural goods exports and stock prices contributed positively to the index this month, more than offsetting the large negative contributions from building approvals and the yield spread. The six-month change in the index has increased to 3.5 percent (about a 7.0 percent annual rate), up from 2.1 percent (about a 4.2 percent annual rate) in the previous six-month period ending February. However, the strengths among the leading indicators have only been slightly more widespread than the weaknesses over the past six months.
  • The coincident index, a measure of current economic activity, also increased in August, helped by continued gains in employment. The coincident index increased 0.6 percent (about a 1.1 percent annual rate) from February to August 2008, in line with its growth rate over the previous six months. In addition, the strengths among the coincident indicators have remained widespread in recent months. At the same time, real GDP growth decreased to an average annual rate of 1.9 percent in the first half of the year, down sharply from a 3.6 percent average annual rate for the second half of 2007.
  • After a brief decline in the first two months of 2008, the leading index has risen at a fairly steady pace, but this increase, due to a large extent to increasing real money supply, has occurred despite spreading weakness among its components in recent months. Meanwhile, the coincident index has been on a general increasing trend since 2006, although its growth rate has gradually slowed over the past year. All in all, the recent behavior of the composite indexes still suggests that economic growth will be slow in the near term.

LEADING INDICATORS. Five of the seven components in the leading index increased in August. The positive contributors to the index — in order from the largest positive contributor to the smallest — are the sales to inventories ratio*, gross operating surplus*, money supply*, rural goods exports* and share prices. Building approvals* and the yield spread declined.

With the 0.4 percent increase in August, the leading index now stands at 191.8 (1990=100). Based on revised data, this index increased 0.4 percent in July and increased 0.4 percent in June. During the six-month period through August, the leading index increased 3.5 percent, and four of the seven components increased (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. Three of the four components in the coincident index increased in August. The increases — in order from the largest positive contributor to the smallest — occurred in employed persons, household gross disposable income*, and retail trade. Industrial production was unchanged.

With the increase of 0.1 percent in August, the coincident index now stands at 145.7 (1990=100). Based on revised data, this index increased 0.2 percent in July and decreased 0.1 percent in June. During the six-month period through August, the coincident index increased 0.6 percent, with three components in the series making positive contributions (diffusion index, six-month span equals 75.0 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 October 28, 2008. 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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