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Economy in Brief

U.S. Leading Indicators Continued Lower
by Tom Moeller December 18, 2008

The Conference Board indicated that it's composite index of leading economic indicators fell during November by 0.4% after a slightly revised 0.9% October decline. The peak for the index was in July of last year and the six-month percent change fell to -5.6%, the largest rate of decline since 1990.

Six of the ten components of the leading index fell last month with the largest decline coming from building permits which alone subtracted 0.5% from the leading index. Higher initial claims for jobless insurance in addition subtracted 0.3% and lower stock prices subtracted 0.4%. Also down were weekly hours, vendor performance, and consumer expectations. A steeper yield curve and faster money supply growth together added back 1.0% to the index level.

The breadth of one-month increase amongst the leaders' 10 components improved slightly to 40% but over a six-month period the breadth of gain amongst the components remained quite low at 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 reversed the prior month's gain and fell 0.3%. Three quarters of the index components fell m/m but over six months 12.5% 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% after no change in October. The ratio of coincident-to-lagging indicators (a measure of economic excess) fell back to its lowest level since 1975.

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

Business Cycle Indicators (%) November October September August 6-Month % (AR) 2007 2006 2005
Leading -0.4 -0.9 0.0 -5.6 -0.4 1.3 2.7
Coincident -0.3 0.3 -1.0 -3.5 1.7 2.4 2.5
Lagging 0.1 0.0 0.6 3.6 2.9 3.1 3.1
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