The coincident economic index, a measure of current economic activity, remained unchanged in November. In the six months from May to November, the CEI has fallen by 0.4 percent (about a 0.8 percent annual rate), a sharp reversal from its 0.5 percent increase (about a 1.0 percent annual rate of growth) during the previous six months. At the same time, the weaknesses among the coincident indicators have become more widespread. In addition, real GDP contracted at a 2.5 percent annual rate (revised) in the third quarter, the first time since the early 1990s that its growth rate has turned negative.
The leading economic index has been declining since October of 2007, and in recent months the pace of this decline has picked up sharply and its six month growth rate has reached its lowest point since 1980. The coincident economic index has declined slightly since May. The accelerating and widespread decline in LEI suggests that the economy will remain weak in the near term, and that the contraction in economic activity is likely to become deeper.
LEADING INDICATORS
Three of the seven components that make up the leading economic index increased in November. The positive contributors - from the largest positive contributor to the smallest - were yield spread, productivity for the whole economy and operating surplus of corporations. The negative contributors - from the largest negative contributor to the smallest - were order book volume, volume of expected output, consumer confidence, and stock prices.
With the 1.0 percent decrease in November, the leading economic index now stands at 94.4 (2004=100). Based on revised data, this index declined 1.8 percent in October and declined 1.2 percent in September. During the six-month span through November, the leading index decreased 6.3 percent, with two of the seven components advancing (diffusion index, six-month span equals 28.6 percent).
COINCIDENT INDICATORS
Three of the four components that make up the coincident economic index increased in November. The positive contributors - from the largest positive contributor to the smallest - were employment, real household disposable income, and retail sales. Industrial production declined in November.
After remaining unchanged in November, the coincident economic index now stands at 103.9 (2004=100). Based on revised data, this index decreased 0.1 percent in October and remained unchanged in September. During the six-month period through November, the coincident index decreased 0.4 percent, with one of the four components advancing (diffusion index, six-month span equals 25.0 percent).
