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Economy in Brief

Leading Economic Indicators Recovered
by Tom Moeller November 21, 2005

The Conference Board reported that the Composite Index of Leading Economic Indicators recovered 0.9% in October. The rise recouped virtually all of the index's declines since June.

The breadth of one month gain amongst the 10 components of the leading index improved to 70% and was the broadest since June. Lower claims for unemployment insurance and longer hours worked in the factory sector had the largest positive effects on the leaders' one month change and offset large negative influences from lower stock prices and lower building permits.

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 0.1% following an upwardly revised 0.3% rise during September. During the last ten years there has been a 64% correlation between the change in the coincident indicators and real GDP.

The lagging indicators rose 0.8%. Higher C&I loans and a higher services CPI growth rate contributed greatly to the October increase. The ratio of coincident to lagging indicators, a measure of actual economic performance versus excess, fell after an upwardly revised September gain 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 Oct Sept 6 Month Chg., AR 2004 2003 2002
Leading 0.9% -0.8% 2.4% 7.7% 5.1% 5.0%
Coincident 0.1% 0.3% 1.2% 2.7% 0.4% -0.6%
Lagging 0.8% -0.2% 3.4% -0.1% -0.1% -0.7%
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