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Economy in Brief

Leading Economic Indicators Up Again
by Tom Moeller December 22, 2005

The Composite Index of Leading Economic Indicators from the Conference Board increased 0.5% following an upwardly revised 1.0% gain in October. It was the third increase in the last five months and beat Consensus expectations for a 0.4% rise.

The breadth of one month gain amongst the 10 components of the leading index remained firm at 70% as higher stock prices, a higher money supply, higher consumer confidence and fewer claims for unemployment insurance offset negative influences from lower capital goods orders and easier vendor performance.

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% following an upwardly revised 0.2% October gain. 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 0.6% for the second month of strong gain led by higher C&I loans, a higher services CPI growth rate, a longer unemployment duration and higher interest rates. The ratio of coincident to lagging indicators, a measure of actual economic performance versus excess, fell for the eighth month this year to its lowest level since August 2003.

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

Business Cycle Indicators Nov Oct 6 Month Chg., AR 2004 2003 2002
Leading 0.5% 1.0% 2.4% 7.7% 5.1% 5.0%
Coincident 0.2% 0.2% 1.2% 2.7% 0.4% -0.6%
Lagging 0.6% 0.7% 3.4% -0.1% -0.1% -0.7%
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