The Conference Board reports today that the leading index for France declined 0.1 percent and the coincident index increased 0.2 percent in December.



The leading index decreased slightly in December, as a large positive contribution from new unemployment claims (inverted) was offset by large negative contributions from industrial new orders and production expectations for months ahead. From June to December, the leading index grew 0.2 percent (about a 0.5 percent annual rate), down from the 3.0 to 3.5 percent average annual growth rate in the first half of the year. In addition, the weaknesses among the leading indicators have continued to be more widespread than strengths in recent months.

The coincident index increased slightly again in December. This index of current economic activity has been on a slightly rising trend since mid-2003, but its growth has slowed down gradually to about a 1.0 percent annual rate from about a 2.0 percent annual growth rate at the beginning of 2006. However, the strengths among the coincident indicators continue to be widespread.

The leading index was growing rapidly through September 2006, but its growth has slowed sharply in the last quarter of 2006, and it has been essentially flat since July 2006. At the same time, real GDP held steady in the third quarter of 2006, following 3.2 percent growth (average annual rate) in the first half of 2006. The recent behavior of the leading index so far still suggests that economic growth is likely to continue, but perhaps at a slow to moderate rate in the near term.

LEADING INDICATORS. Three of the seven components of the leading index increased in December. The positive contributors to the index- in order from the largest positive contributor to the smallest- are the inverted new unemployment claims, the yield spread, and the stock price index. The negative contributors to the index- beginning with the largest negative contributor- are industrial new orders, production expectations, and the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing*. Building permits (residential) remained unchanged in December.

With the decrease of 0.1 percent in December, the leading index now stands at 129.1 (1990=100). Based on revised data, this index increased 0.4 percent in November and declined 0.4 percent in October. During the six-month span through December, the leading index increased 0.2 percent, and two of the seven components increased (diffusion index, six-month span equals 28.6 percent).

COINCIDENT INDICATORS. All four components of the coincident index increased in December. The positive contributors to the index- in order from the largest positive contributor to the smallest- were industrial production, personal consumption, wage and salaries*, and employment*.

With the increase of 0.2 percent in December, the coincident index now stands at 120.3 (1990=100). Based on revised data, this index increased 0.1 percent in November and increased 0.1 percent in October. During the six-month period through December, the coincident index increased 0.4 percent, with three of the four series making a positive contribution (diffusion index, six-month span equals 75.0 percent).