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Economy in Brief

Leading Economic Indicators Post Second Decline
by Tom Moeller September 22, 2005

The August Composite Index of Leading Economic Indicators reported by the Conference Board fell 0.2% following a revised 0.1% dip in July. These declines and slight downward revisions to prior months' data lowered six-month growth in the leaders to 0.7%, the worst since 2001.

The breadth of one month gain amongst the 10 components of the leading index fell to 50%, down from a high of 85% during June. Lower consumer expectations had the largest negative effect on the leader's one month change.

The method of calculating the contribution to the index from the interest rate yield spread has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found here.

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% (2.7% y/y) with each of the four components up during the last six months.

The lagging indicators fell 0.1%, the first m/m decline this year. Increases since the 2004 low have been moderate by postwar standards. The ratio of coincident to lagging indicators, a measure of actual economic performance versus excess, rose slightly m/m but has moved sideways this year.

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

Business Cycle Indicators Aug July 6-Month Chg 2004 2003 2002
Leading -0.2% -0.1% 0.7% 7.7% 5.1% 5.0%
Coincident 0.2% 0.1% 2.4% 2.7% 0.4% -0.6%
Lagging -0.1% 0.3% 2.4% -0.1% -0.1% -0.7%
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