Posted on 08/21/2003 7:18:08 AM PDT by Starwind
The Conference Board's U.S. Leading Index Points to a Better Economy This Fall
Thursday August 21, 10:00 am ET
NEW YORK, Aug. 21 /PRNewswire/ -- The Conference Board announced today that the U.S. Leading Economic Index increased 0.4 percent, the Coincident Index increased 0.1 percent, and the Lagging Index increased 0.1 percent in July.
The Coincident Index continued to rise very modestly in July. But the Leading Economic Index rose for the fourth straight month, after a weak first quarter of the year. The chief concern last spring was a lack of business confidence and investment. This was related to a lack of pricing power. But consistent with the rising trend in the indicators, business investment actually began to recover in the second quarter and could well be performing even better now in the third quarter.
"With export growth still months away, the burden now falls on consumer spending and business investment," says Ken Goldstein, Conference Board Economist. "The bottom line is that the leading economic indicators are more favorable now than any time since the recession started more than two years ago."
The Conference Board(R) U.S. Business Cycle Indicators(SM)
U.S. Leading Economic Indicators
and related composite indexes for JULY 2003
The Conference Board announced today that the U.S. leading index increased 0.4 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.1 percent in July.
LEADING INDICATORS. Half of the ten indicators that make up the leading index increased in July. The positive contributors -- beginning with the largest positive contributor -- were interest rate spread, real money supply, average weekly initial claims for unemployment insurance (inverted), vendor performance, and stock prices. The negative contributors -- beginning with the largest negative contributor -- were average weekly manufacturing hours, index of consumer expectations, building permits, manufacturers' new orders for nondefense capital goods, and manufacturers' new orders for consumer goods and materials.The leading index increased for the fourth consecutive month in July. The leading index has now increased significantly (almost 2 percent) from its recent low in March, and this growth has been widespread.
The coincident index increased slightly in July. The coincident index has now been rising gradually from its recent low in April, with increases in personal income, industrial production, and manufacturing and trade sales partially offset by continued declines in employment.
The recent improvement in the growth rate of the leading index is similar to its performance at the end of 2001 and in early 2002, which was followed by stronger economic growth. The leading index is again signaling a pickup in the rate of economic growth, which is starting to be reflected in both real GDP and the coincident index.
The leading index now stands at 112.5 (1996=100). Based on revised data, this index increased 0.3 percent in June and 1.1 percent in May. During the six-month span through July, the leading index increased 1.2 percent, with six of the ten components advancing (diffusion index, six-month span equals 60 percent).
COINCIDENT INDICATORS. Three of the four indicators that make up the coincident index increased in July. The positive contributors to the index -- beginning with the largest positive contributor -- were industrial production, personal income less transfer payments, and manufacturing and trade sales. Employees on nonagricultural payrolls declined in July.
The coincident index now stands at 115.2 (1996=100). This index held steady in June and increased 0.1 percent in May. During the six-month period through July, the coincident index decreased 0.3 percent.
The next release is scheduled for September 18, 2003 at 10 A.M. ET.
LAGGING INDICATORS. The lagging index increased 0.1 percent to 98.2 (1996=100) in July, with three of the seven components advancing. The positive contributors to the index -- beginning with the largest positive contributor -- were commercial and industrial loans outstanding, average duration of unemployment (inverted), and change in labor cost per unit of output. The two negative contributors were average prime rate charged by banks and change in CPI for services. Ratio of consumer installment credit to personal income and ratio of manufacturing and trade inventories to sales both held steady in July. Based on revised data, the lagging index decreased 0.8 percent in June and decreased 0.1 percent in May.
DATA AVAILABILITY. 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 August 20, 2003. Some series are estimated as noted below.
NOTES: 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 deflator for 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, and the personal consumption expenditure deflator for 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.
. Summary Table of Composite Indexes . 2003 6-month . May Jun Jul Jan to Jul . Leading index 111.7 112.0 r 112.5 p . Percent Change 1.1 .3 r .4 p 1.2 . Diffusion 90.0 70.0 50.0 60.0 . Coincident Index 115.1 r 115.1 r 115.2 p . Percent Change .1 .0 r .1 p -0.3 . Diffusion 75.0 50.0 87.5 25.0 . Lagging Index 98.9 r 98.1 r 98.2 p . Percent Change -.1 -.8 .1 p -1.3 . Diffusion 64.3 21.4 57.1 14.3 . n.a. Not available p Preliminary r Revised . Indexes equal 100 in 1996 . Source: The Conference Board
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NEW YORK (Dow Jones)--The Dow Jones-Bank of Tokyo-Mitsubishi weekly business barometer decreased by 0.9% in the week ended Aug. 9, according to data released Thursday.
The decline follows a 1.0% increase in the prior week.
A statistically smoothed version of the index decreased by 0.1%, the fourth straight weekly decline after a string of six straight weeks of increases.
"The roller-coaster pattern of economic activity continued," said Mike Niemira, senior economist at BTM, who compiles the index. "After clear improvement through mid-July, the pace of economic activity appears to have decelerated again. Although the ingredients are in place for some lasting improvement, the barometer suggests the economy is still in an `uncertain state,' with a very uneven performance over the last four weeks."
The DJ-BTM barometer is a weighted 10-component index designed as a coincident measure of overall economic activity.
Of the 10 components, three increased and seven decreased. On an unweighted, but seasonally adjusted basis, truck production rose by 6.3%, for the largest increase, while the Mortgage Bankers Association's home-purchase index declined by 10.3%, for the largest decrease.
The DJ-BTM barometer includes four components from the goods-producing sectors - steel, lumber, auto and truck production - as well as electricity output, a measure of utility production, and coal production, a proxy for the mining industry. The financial sector is represented by the Mortgage Bankers Association's purchase index, while the services sector is covered by measures of inflation-adjusted chain-store sales and by box-office receipts, as well as by freight-car loadings, which are also an early indicator of goods orders.
A separate DJ-BTM index of production trends, which is drawn from the six production-related components and is statistically indexed to the Federal Reserve's industrial-production index, decreased by 0.2% in the latest week after decreasing by 0.6% in the prior week.
For the full report, please see: http:www.btmna.com/reports/research/barometer/usbarometer.html
-By John McAuley, Dow Jones Newswires; 201-938-4425; john.mcauley@dowjones.com
(END) Dow Jones Newswires
08-21-03 1000ET- - 10 00 AM EDT 08-21-03
now falls? Now? What planet was Goldstein on previously?
"The bottom line is that the leading economic indicators are more favorable now than any time since the recession started more than two years ago."
LOL! That doesn't say much.
The [leading index] positive contributors -- beginning with the largest positive contributor -- were interest rate spread, real money supply, average weekly initial claims for unemployment insurance (inverted), vendor performance, and stock prices.
Three of these, interest rate spread, real money supply, and stock prices are all distorted by Greenspan's pumping the money supply - not very independent measures.
The positive contributors to the [coincident] index -- beginning with the largest positive contributor -- were industrial production, personal income less transfer payments, and manufacturing and trade sales.
As discussed elsewhere, industrial production was largely driven by Utilities output for summer heatwave cooling demands and consumer cash-out re-fi enabled purchases of autos (re-fi's now declining).
BTM - U.S. Business Barometer (which you may want to bookmark) then click on 'Latest Report'
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