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The leading index held steady for the second consecutive month, while the coincident index increased 0.3 percent, and the lagging index increased 0.5 percent in January. Taken together, the three composite indexes and their components show that the economy remains healthy.
--According to the coincident indicators, 1998 started off with clearly positive growth. In the first quarter, however, GDP is unlikely to match the 3.9 percent increase in the fourth quarter of 1997.
--The leading indicators point to moderation of the expansion and low risk of a recession in 1998.
--The lagging indicators show signs of new cyclical imbalances, but an extended upward trend is needed before the economy's stability would be jeopardized.
LEADING INDICATORS. Five of the ten leading economic indicators that make up the leading index rose in January. The most significant increases--in order from the largest positive contributor to the smallest--are money supply in 1992 dollars, manufacturers' new orders of nondefense capital goods, and consumer expectations. The most significant negative contributors to the composite leading index in January are average manufacturers' new orders of consumer goods and materials, interest rate spread, and vendor performance (slower deliveries diffusion index).
The leading index stands at 104.5 in January (1992 equals 100). The last increase was 0.1 percent in November. During the six-month span through January, the leading index rose 0.6 percent and five of the ten components advanced (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS. All three of the available components of the coincident index--employees on nonagricultural payrolls, industrial production, and personal income less transfer payments--increased in January. (Data on manufacturing and trade sales are not yet available.)
With the increase of 0.3 percent in January, the coincident index stands at 118.9 (1992 equals 100). Based on revised data, this index increased 0.4 percent in December and increased 0.5 percent in November. During the six-month period through January, the coincident index increased 2.0 percent, with all four components making positive contributions.
LAGGING INDICATORS. With the increase of 0.5 percent in January, the lagging index stands at 105.6 (1992 equals 100). Commercial and industrial loans outstanding, average duration of unemployment, and change in labor costs are positive contributors. Change in consumer price index for services is the sole negative contributor. The lagging index decreased 0.2 percent in December and increased 0.2 percent in November.
The data series used to compute the three composite indexes and reported in the tables in this release are those available as of 12 Noon on March 2, 1998.
REVISIONS AND COMPOSITE INDEX METHODOLOGY. The three composite indexes in this report incorporate the long-history revision (covering changes in the components that fall outside the moving, six-month window) that was first released on December 17, 1997. The full set of revised historical data, a description of the methodology, and the new factors that are used to construct the three composite indexes are available on the BCI web site (www.tcb-indicators.org). Under normal circumstances, updates to the leading, coincident, and lagging indexes only incorporate revisions to data over the past six months.
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The schedule for the Leading Economic Indicators news release in 1998:
February data ... Wednesday, April 1
March data ... Tuesday, May 5
April data ... Tuesday, June 2
May data ... Wednesday, July 1
June data ... Tuesday, August 4
July data ... Tuesday, September 1
August data ... Wednesday, September 30
September data ... Tuesday, November 3
October data ... Tuesday, December 1
November data ... Wednesday, December 30
All releases are at 10:00 a.m. (ET)
ABOUT THE CONFERENCE BOARD-- The Conference Board is a worldwide research and business membership group, with more than 2,700 corporate and other members in 60 nations. One of the leading private sources of economic and business intelligence, The Conference Board is a not-for-profit, non-advocacy organization.
In December 1995, the Conference Board assumed responsibility for computing the composite indexes from the U.S. Department of Commerce, which is in keeping with its mission to improve the business enterprise system and to enhance the contribution of business to society.
The Conference Board has a website devoted to the leading index and related economic indicators. Please visit
http://www.tcb-indicators.org
Suggestions and comments are most welcome as we develop this INTERNET service that supports The Conference Board's Business Cycle Indicators project and related economic research. We also publish a monthly report, Business Cycle Indicators, that contains the composite indexes and over 250 additional economic series. Call (212) 339-0345 to subscribe.
Contacts at The Conference Board BCI Project: Media Contacts: Michael Boldin: (212) 339-0338 Randy Poe: (212) 339-0234 Recorded Message: (212) 339-0330 Frank Tortorici (212) 339-0231 Email: lei@conference-board.org Website: www.tcb-indicators.org Customer Service: (212) 339-0345 ----------------------------------------------------------------------
Table 1.--Summary of Composites Indexes
1997
July Aug. Sept. Oct. Nov. Dec. Jan.
Leading index 103.9 104.0 r 104.3 104.4 104.5 104.5 104.5 p
Percent change .3 .1 r .3 r .1 .1 .0 .0 p
Diffusion index 85.0 65.0 80.0 70.0 40.0 60.0 50.0
Coincident index 116.6 116.8 117.2 117.5 118.1 118.6 r 118.9 p
Percent change .3 .2 .3 .3 .5 .4 r .3 p
Diffusion index 75.0 62.5 100.0 75.0 75.0 100.0 83.3
Lagging index 104.5 104.8 104.8 105.0 r 105.2 105.0 105.5 p
Percent change -.3 .3 .0 .2 r .2 r -.2 .5 p
Diffusion index 50.0 64.3 28.6 78.6 64.3 21.4 50.0
Jan. 97 tFeb. to Mar. to Apr. to May to June to July to
July Aug. Sept. Oct. Nov. Dec. Jan. 98
Leading index
Percent change 1.1 .7 .9 1.1 .9 .9 .6
Diffusion index 85.0 60.0 80.0 80.0 85.0 60.0 50.0
Coincident index
Percent change 1.9 1.6 1.6 1.6 2.1 2.1 2.0
Diffusion index 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Lagging index
Percent change .1 .6 .3 .3 .4 .2 1.0
Diffusion index 28.6 71.4 28.6 35.7 28.6 42.9 50.0
p Preliminary. r Revised.
The diffusion indexes measure the proportion of the components that are rising. Components that rise
more than 0.05 percent are given a value of 1.0, components that change less than 0.05 percent are given
a value of 0.5, and components that fall more than 0.05 percent are given a value of 0.0.
Source: The Conference Board
Note: The full history of the composite and diffusion indexes are available
on the Web site www.tcb-indicators.org
Table 2.--Data and Net Contributions for Components of the Leading Index
1997
Component
July Aug. Sept. Oct. Nov. Dec. Jan.
Leading index component data
Average workweek, production
workers, mfg. (hours).............. 41.8 41.8 41.9 42.0 42.1 42.2r 42.1p
Average weekly initial claims, state
unemployment insurance (thousands)* 304.9 326 308.8 308.5 318.3 314.3 317.8
Manufacturers' new orders, consumer
goods and materials (mil. 1992 dol. 153791 156708 157243 156508 154902r 157463r 153687p
Vendor performance--slower deliveries
diffusion index (percent).......... 54.8 55.6 55.5 55.0 55.2 54.0 52.0
Manufacturers' new orders, nondefense
capital goods (mil. 1992 dol.)..... 45572 46073 46644 47838r 56244r 43874r 48638p
Building permits (thous.)............ 1414 1397 1460 1487 1440 1482 1526
Stock prices, 500 common stocks (c)
(index: 1941-43=10)................ 925.29 927.74 937.02 951.16 938.92 962.37 968.30
Money supply, M2 (bil. 1992 dol.).... 3477.2r 3503.1r 3515.4r 3529r 3546.3r 3565.7r 3585p
Interest rate spread, 10-year Treasury
bonds less federal funds........... 0.7 0.76 0.67 0.53 0.36 0.31 -0.02
Index of consumer expectations (c)
(1966:1=100)....................... 102.6 100.3 100.7 102.8 102.3 96.1 102.2
LEADING INDEX (1992=100)............. 103.9 104.0r 104.3 104.4 104.5 104.5 104.5p
Percent change from preceding month 0.3 0.1r 0.3r 0.1 0.1 0 0p
Leading index net contributions
Average workweek, production
workers, mfg....................... .... .00 .03 .03 .03 .03r -.03 p
Average weekly initial claims, state
unemployment insurance............. .... -.11 .09 .00 -.05 .02 -.02
Manufacturers' new orders, consumer
goods and materials................ .... .06 .01 -.01 -.03r .05r -.07p
Vendor performance--slower deliveries
diffusion index.................... .... .02 .00 -.02 .01 -.04 -.06
Manufacturers' new orders, nondefense
capital goods...................... .... .01 .01 .02 .12 -.19 .08p
Building permits..................... .... -.01 .05 .02 -.04 .03 .03
Stock prices, 500 common stocks (c) .... .01 .02 .03 -.03 .05 .01
Money supply, M2..................... .... .14r .07r .07r .09 .10r .10p
Interest rate spread, 10-year Treasury
bonds less federal funds........... .... .01 -.02 -.03 -.03 -.01 -.07
Index of consumer expectations (c) .... -.02 .00 .02 -.01 -.07 .07
p Preliminary. r Revised.
* Inverted series; a negative change in this component makes a positive contribution to the index.
(c) Copyrighted. Series from private sources are provided through the courtesy of the compilers and
are subject to their copyrights: Stock prices, Standard & Poor's Corporation; Index of consumer expectations,
University of Michigan's Survey Research Center.
NOTE.--The percent change in the index equals (except for rounding differences) the sum of the net
contributions of the individual components.
Table 3.--Data and Net Contributions for Components of the Coincident and Lagging Indexes
1997
Component
July Aug. Sept. Oct. Nov. Dec. Jan.
Coincident index component data
Employees on nonagricultural payrolls
(thousands)........................ 122440 122492 122792 123083 123512r 123867r 124225
Personal income less transfer payments
(ann. rate, bil. 1992 dol.)........ 5099.8 5128.7 5137.8 5161.6r 5199.1r 5218.6r 5243.9
Industrial production (index: 1992=10 124.527 125.246 125.585 126.550r 127.378r 127.896r 127.925
Manufacturing and trade sales
(mil. 1992 dol.)................... 723583 717486 725258 723480r 723116r 732071p n.a.
COINCIDENT INDEX (1992=100).......... 116.6 116.8 117.2 117.5 118.1 118.6r 118.9p
Percent change from preceding month .3 .2 .3 .3 .5 .4r .3p
Coincident index net contributions
Employees on nonagricultural payrolls .... .02 .12 .12 .17r .14r .16
Personal income less transfer payment .... .15 .05 .12 .19 .10r .15
Industrial production................ .... .08 .04 .10r .09r .05r .00
Manufacturing and trade sales........ .... -.10 .12 -.03 -.01p .14p n.a.
Lagging index component data
Average duration of unemployment
(weeks)*........................... 16.5 15.8 15.9 16.3 15.6 16.3 15.6
Ratio, manufacturing and trade inventories
to sales (chain 1992 dol.)......... 1.34 1.36 1.35 1.36 1.36r 1.35p n.a.
Change in index of labor cost per unit of
output, mfg. (6-month percent, ann. -1.9 -1.7r -1.7 -.8r -.8r -.2r .6p
Average prime rate charged by banks
(percent).......................... 8.50 8.50 8.50 8.50 8.50 8.50 8.50
Commercial and industrial loans
outstanding (mil. 1992 dol.)....... 546704r 550355r 559290r 564756r 571260r 571683r 582473p
Ratio, consumer installment credit out-
standing to personal income (percen 17.69 17.68 17.65 17.72 17.54r 17.53p n.a.
Change in CPI for services
(6-month percent, ann. rate)....... 3.0 2.7 2.6r 2.8 2.9 2.7 2.3
LAGGING INDEX (1992=100)............. 104.5 104.8 104.8 105.0r 105.2 105.0 105.5p
Percent change from preceding month -.3 .3 .0 .2r .2r -.2 .5p
Lagging index net contributions
Average duration of unemployment..... .... .14 -.02 -.08 .14 -.14r .21
Ratio, manufacturing and trade invent
to sales........................... .... .11 -.07 .07 .05 -.06p n.a.
Change in index of labor cost per unit of
output, mfg........................ .... .01r .00r .05r .00r .03r .06p
Average prime rate charged by banks.. .... .00 .00 .00 .00 .00 .00
Commercial and industrial loans
outstanding........................ .... .07 .18 .11r .13 .01p .31p
Ratio, consumer installment credit out-
standing to personal income........ .... -.01 -.03 .06 -.16r -.01p n.a.
Change in CPI for services........... .... -.05 -.02 .03r .02 -.03r -.09
CPI Consumer Price Index. n.a. Not available. p Preliminary. r Revised.
* Inverted series; a negative change in this component makes a positive contribution to the index.
NOTE.--The percent change in the index equals (except for rounding differences) the sum of the net
contributions of the individual components.
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