The coincident index increased slightly again in May and there were small upward revisions to previous months as new data became available for the employment and wage and salaries components. The six month growth rate of the coincident index has picked up to about a 3.0 to 3.5 percent annual rate in recent months, up from about a 1.0 to 2.0 percent annual rate in 2006. In addition, the strengths among the coincident indicators have been very widespread.
The leading index grew very rapidly in 2006, but it has been essentially flat since December 2006 with the strengths and weaknesses among the leading indicators roughly balanced since then. At the same time, real GDP grew at a 2.2 percent annual rate (revised) in the first quarter, up from 1.0 percent (average annual rate) in the second half of 2006. The recent behavior of the leading and coincident indexes still suggests slow to moderate economic growth should continue in the near term.
LEADING INDICATORS. Three of the seven components of the leading index increased in May. The positive contributors to the index — in order from the largest positive contributor to the smallest — are the stock price index, building permits (residential), and the yield spread. The negative contributors to the index — beginning with the largest negative contributor — are industrial new orders, the inverted new unemployment claims, production expectations, and the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing*.
With the decrease of 0.1 percent in May, the leading index now stands at 129.0 (1990=100). Based on revised data, this index declined 0.1 percent in April and increased 0.3 percent in March. During the six-month span through May, the leading index decreased 0.3 percent, and four of the seven components increased (diffusion index, six-month span equals 57.1 percent).
COINCIDENT INDICATORS. Three of the four components of the coincident index increased in May. The positive contributors to the index were employment, wage and salaries, and industrial production. Personal consumption declined in May.
With the increase of 0.2 percent in May, the coincident index now stands at 122.7 (1990=100). Based on revised data, this index increased 0.1 percent in April and increased 0.3 percent in March. During the six-month period through May, the coincident index increased 1.8 percent, with all of the four series making a positive contribution (diffusion index, six-month span equals 100.0 percent).
