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Economy in Brief

Leading Economic Indicators Fell for Third Month
by Tom Moeller October 20, 2005

The Composite Index of Leading Economic Indicators reported by the Conference Board fell 0.7% in September following declines of 0.1% during the prior two months. The initial effects of the Gulf hurricanes as well as earlier weakening amongst the leaders' components left the index's six-month growth at a low 0.9%. Consensus expectations had been for a 0.5% September decline.

The breadth of one month gain amongst the 10 components of the leading index fell to 45%, down from a high of 85% during June. Higher claims for unemployment insurance and lower consumer expectations had the largest negative effects 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 fell 0.1% following a downwardly revised 0.1% decline during August. The decline was due mostly to lower industrial output in September although over the prior six months, all of the component series were up.

The lagging indicators rose 0.2% with much of the rise due to a longer average duration of unemployment. The ratio of coincident to lagging indicators, a measure of actual economic performance versus excess, fell to its lowest level since late 2003.

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

Business Cycle Indicators Sept Aug 6 Month Chg., AR 2004 2003 2002
Leading -0.7% -0.1% 0.9% 7.7% 5.1% 5.0%
Coincident -0.1% -0.1% 1.5% 2.7% 0.4% -0.6%
Lagging 0.2% 0.0% 2.9% -0.1% -0.1% -0.7%
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