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Economy in Brief

Leading Indicators Down Again
by Tom Moeller October 21, 2004

The 0.1% September decline in the Conference Board's Composite Index of Leading Economic Indicators was expected and the fourth consecutive monthly drop. August's 0.3% decline was unrevised.

Among the 10 components of the leading index 60% fell over a one month span with a narrower yield curve and quicker vendor deliveries providing the largest negative influences. Over a six month span 70% of the leaders fell.

The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.

The coincident indicators rose 0.2% but the six-month growth rate slipped to 2.1% from its high of 3.3% early this year. During the last ten years there has been an 82% correlation between the six month growth in the coincident indicators and two quarter growth in real GDP.

The lagging indicators were unchanged following a deepened 0.3% August drop. The ratio of the coincident to the lagging indicators, a measure of how the economy is performing relative to its excess, rose slightly but positive six month growth in the lagging index indicates that excesses may be building.

Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators Sept Aug 6-Month Chg 2003 2002 2001
Leading -0.1% -0.3% -0.3% 1.3% 2.2% -0.8%
Coincident 0.2% 0.1% 2.1% 0.4% -0.5% -0.5%
Lagging 0.0% -0.3% 1.2% -2.2% -2.8% -1.4%
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