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Economy in Brief

U.S. Leading Indicators Fell Again
by Tom Moeller November 20, 2008

The Conference Board indicated that the October composite index of leading economic indicators fell by 0.8% after rising a downwardly revised 0.1% during September. The peak for the index was in July of last year and the six-month percent change fell to -4.7%, the largest rate of decline in nearly one year.

Six of the ten components of the leading index fell last month notably consumer expectations, vendor performance, stock prices and building permits.

The breadth of one-month increase amongst the leaders' 10 components fell back to 35% and over a six-month period the breadth of gain amongst the components picked slightly to 30%.

The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.

The coincident indicators rose 0.2% following five consecutive months of decline. Three quarters of the index components rose m/m but over six months none rose. Over the last ten years there has been an 86% correlation between the y/y changes in the coincident indicators and real GDP.

The lagging index ticked up 0.1%, the smallest increase in four months. The ratio of coincident to lagging indicators (a measure of economic excess) also ticked up slightly but remained near its lowest level since 1982.

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

Business Cycle Indicators (%) October September August July, 6 Month % (AR) 2007 2006 2005
Leading -0.8 0.1 -0.9 -4.7 -0.4% 1.3% 2.7%
Coincident 0.2 -0.7 -0.4 -2.4 1.7% 2.4% 2.5%
Lagging 0.1 0.3 0.4 2.5 2.9% 3.1% 3.1%
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