In addition, the weaknesses among the leading indicators have remained very widespread in recent months.
The coincident index, a measure of current economic activity, remained unchanged in August after increasing slightly in July. Since February, the coincident index has declined by 0.4 percent (about a -0.8 percent annual rate), which is well below the 0.7 percent rate of increase (1.5 percent annualized) between August 2007 and February 2008. In addition, the weaknesses among the coincident indicators have remained very widespread, with none of the components increasing over the past six months.
Since October 2007, the leading index has been falling with very widespread weaknesses among its components; the decline in the leading index is the largest since mid-2001. At the same time, the coincident index has weakened in recent months, the first sustained period of negative growth in the coincident index since 2003. Meanwhile, real GDP fell 1.3 percent (annual rate) in the second quarter, its first decline in five years. The recent behavior of the composite indexes suggests continued economic weakness going forward.
LEADING INDICATORS
Two of the seven components of the leading index increased in August. The positive contributors to the index - in order from the largest positive contributor to the smallest - are the stock price index and the yield spread. The negative contributors to the index - beginning with the largest negative contributor - are production expectations, industrial new orders, building permits (residential), the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing, and the inverted new unemployment claims.
With the decrease of 0.3 percent in August, the leading index now stands at 125.5 (1990=100). Based on revised data, the index declined 0.7 percent in July and declined 0.4 percent in June. During the six-month span through August, the leading index decreased 2.6 percent, and one of the seven components increased (diffusion index, six-month span equals 21.4 percent).
COINCIDENT INDICATORS
One of the four components of the coincident index increased in August. The positive contributor to the index was wage and salaries. Employment, industrial production, and personal consumption declined in August.
Remaining unchanged in August, the coincident index now stands at 123.0 (1990=100). Based on revised data, the index increased 0.1 percent in July and decreased 0.1 percent in June. During the six-month period through August, the coincident index decreased 0.4 percent, with none of the four series making a positive contribution (diffusion index, six-month span equals 0.0 percent).
