The coincident index decreased this month for the first time since September of 2006, due primarily to a large decline in retail trade. Between April and October, the coincident index increased by 0.5 percent (about a 0.9 percent annual rate), well below the 2.6 percent annual rate of growth the index experienced between October 2006 and April 2007. The strengths among the coincident indicators have been somewhat more widespread than weaknesses in recent months.
The leading index has declined slightly since July after growing at a fast pace during the first half of the year. At the same time, real GDP growth has increased from a 1.6 percent average annual rate during the first half of the year (including a 1.0 percent rate in the second quarter), to a 2.8 percent annual rate for the third quarter. The recent behavior of the leading and coincident indexes still suggests that slow to moderate economic growth should continue in the near term.
LEADING INDICATORS
Five of the seven components in the leading index increased in October. The positive contributors to the leading index - in order from the largest positive contributor to the smallest - are new orders in investment goods industries, stock prices, consumer confidence, gross enterprises and properties income and inventory change series. Negative contributors - in order from largest to smallest - are yield spread, and new residential construction orders.
With the 0.6 percent increase in October, the leading index now stands at 99.5 (1990=100). Based on revised data, this index declined 0.9 percent in September and declined 0.4 percent in August. During the six-month span through October, the leading index increased 0.4 percent, with four of the seven components increasing (diffusion index, six-month span equals 57.1 percent).
COINCIDENT INDICATORS
Two of the four components that make up the coincident index increased in October. The positive contributors to the coincident index were manufacturing sales and employed persons. Retail trade and industrial production declined in October.
With the 0.2 percent decrease in October, the coincident index now stands at 109.6 (1990=100). Based on revised data, this index increased 0.1 percent in September and increased 0.2 percent in August. During the six-month period through October, the coincident index increased 0.5 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).
