The coincident index also increased slightly in July, but there were slight downward revisions in the previous several months as quarterly data for the employment and wages and salaries components became available. The strengths among the coincident indicators have continued to be widespread, but its six month growth rate has moderated somewhat in recent months; the coincident index grew 0.7 percent from January to July (about a 1.4 percent annual rate), down from about 1.6 percent (3.2 percent annual rate) in February.
The leading index has been essentially flat since January and the strengths and weaknesses among the leading indicators have been balanced in recent months. At the same time, real GDP grew at a 1.7 percent average annual rate in the first half of 2007 (including a 1.3 percent rate in the second quarter). The recent behavior of the leading and coincident indexes still suggests that economic growth should continue, but perhaps at a slow to moderate pace in the near term.
LEADING INDICATORS
Three of the seven components of the leading index increased in July. The positive contributors to the index — in order from the largest positive contributor to the smallest — are building permits (residential), production expectations, and the yield spread. The negative contributors to the index — beginning with the largest negative contributor — are industrial new orders, the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing, the stock price index, and the inverted new unemployment claims.
With the increase of 0.1 percent in July, the leading index now stands at 129.1 (1990=100). Based on revised data, this index remained unchanged in June and declined 0.1 percent in May. During the six-month span through July, the leading index increased 0.1 percent, and three of the seven components increased (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS
Two of the four components of the coincident index increased in July. The positive contributors to the index were industrial production and wage and salaries. Personal consumption declined, while employment remained unchanged in July.
With the increase of 0.2 percent in July, the coincident index now stands at 122.2 (1990=100). Based on revised data, this index remained unchanged in June and increased 0.1 percent in May. During the six-month period through July, the coincident index increased 0.7 percent, with all four series making a positive contribution (diffusion index, six-month span equals 100.0 percent).
