The Coincident Economic Index, a measure of current economic activity, declined for a third consecutive month in November led by decreases in industrial production and manufacturing sales. Since May 2008, the CEI has fallen by 0.7 percent (about a -1.3 percent annual rate), a reversal from the 0.8 percent increase (about a 1.5 percent annual rate) during the previous six months. In addition, the weaknesses among the coincident indicators have become more widespread in recent months. At the same time, real GDP has declined at a 1.9 percent average annual rate during the second and third quarter of 2008, well below the 3.5 percent average annual rate of increase during the fourth quarter of 2007 and first quarter of 2008.
The Leading Economic Index has been declining since July 2007 and the pace of this decline has become steeper in recent months as the six-month growth rate for the LEI reached its lowest level since 1974. The Coincident Economic Index fluctuated around a flat trend in the first half of 2008, but has fallen significantly since August 2008. The declining composite indexes continue to suggest that economic activity is likely to remain weak going into 2009 and that the current contraction in economic activity may become deeper in the near term.
LEADING INDICATORS
Two of the seven components in the leading economic index increased in November. The positive contributors - in order from the largest positive contributor to the smallest - are inventory change series and gross enterprises and properties income. Negative contributors - in order from largest to smallest - are new orders in investment goods industries, stock prices, consumer confidence, yield spread and new residential construction orders.
With the 2.2 percent decrease in November, the leading economic index now stands at 94.7 (2004=100). Based on revised data, this index declined 2.7 percent in October and declined 0.9 percent in September. During the six-month span through November, the index decreased 8.0 percent, with three of the seven components increasing (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS
One of the four components that make up the coincident economic index increased in November. The positive contributor to the coincident economic index was employed persons. Industrial production, manufacturing sales and retail trade declined in November.
With the 0.5 percent decrease in November, the coincident economic index now stands at 104.8 (2004=100). Based on revised data, this index decreased 0.3 percent in October and decreased 0.3 percent in September. During the six-month period through November, the index decreased -0.7 percent, with one of the four components increasing (diffusion index, six-month span equals 25.0 percent).
