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The Conference Board U.S. Leading Index Decreased 0.1 Percent in July

Monday, August 21, 2006

Press release from the issuing company

Aug. 17, 2006 -- The Conference Board announced today that the U.S. leading index decreased 0.1 percent, the coincident index increased 0.2 percent and the lagging index decreased 0.1 percent in July. The leading index decreased slightly in July. From January to July, the leading index fell by 0.7 percent (a -1.4 percent annual rate), but it is still 0.9 percent above its July 2005 level. In addition, weaknesses and strengths among the leading indicators have become roughly balanced in recent months. Declining housing permits continued to be the largest negative contributor over this period. The coincident index increased again in July. This measure of current economic activity has been increasing steadily since September 2005, but its growth moderated slightly in the second quarter of 2006 and in July. From January to July, the coincident index grew 1.1 percent (a 2.1 percent annual rate), and employment and industrial production continued to be the major contributors to this growth. The leading index has decreased in four of the last six months and the leading index has fallen below its most recent high reached in January. At the same time, real GDP grew at a 2.5 percent annual rate in the second quarter, following a 5.6 percent gain in the first quarter. The behavior of the leading index so far suggests that slow to moderate economic growth should continue in the second half of the year. LEADING INDICATORS. Five of the ten indicators that make up the leading index increased in July. The positive contributors - beginning with the largest positive contributor - were average weekly manufacturing hours, vendor performance, stock prices, index of consumer expectations, and manufacturers' new orders for consumer goods and materials*. The negative contributors - beginning with the largest negative contributor - were building permits, average weekly initial claims for unemployment insurance (inverted), interest rate spread, manufacturers' new orders for nondefense capital goods*, and real money supply*. The leading index now stands at 138.1 (1996=100). Based on revised data, this index increased 0.1 percent in June and decreased 0.5 percent in May. During the six-month span through July, the leading index decreased 0.7 percent, with four out of ten components advancing (diffusion index, six-month span equals forty-five percent). COINCIDENT INDICATORS. All four indicators that make up the coincident index increased in July. The positive contributors to the index - beginning with the largest positive contributor - were industrial production, employees on nonagricultural payrolls, manufacturing and trade sales*, and personal income less transfer payments*. The coincident index now stands at 123.1 (1996=100). This index increased 0.2 percent in June and increased 0.1 percent in May. During the six-month period through July, the coincident index increased 1.1 percent. LAGGING INDICATORS. The lagging index now stands at 123.7 (1996=100) in July, with one of the seven components advancing. The positive contributor to the index was the average prime rate charged by banks. The negative contributors - beginning with the largest negative contributor - were average duration of unemployment (inverted), commercial and industrial loans outstanding*, and change in CPI for services. The ratio of manufacturing and trade inventories to sales*, change in labor cost per unit of output*, and ratio of consumer installment credit to personal income** held steady in July. Based on revised data, the lagging index increased 0.5 percent in June and increased 0.3 percent in May.

 

 

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