The coincident index decreased slightly in April as negative contributions from industrial production and manufacturing sales more than offset positive contributions from retail trade and employed persons. Despite short-term volatility, this index of economic activity remains on a steady upward trend since 2005. The six month growth rate of the coincident index picked up again in March, following a slight moderation in the first two months of the year. In addition, strengths among the coincident indicators have also been widespread in recent months.
The leading index was fluctuating around an essentially flat trend throughout most of 2006 with its growth rate gradually declining toward the end of the year, but it has picked up sharply in the first four months of 2007. At the same time, real GDP grew at a 2.1 percent annual rate in the first quarter of 2007, below the 3.7 percent average annual rate in the second half of 2006. The continued widespread improvement in the leading index so far suggests that the moderation in economic growth should not persist, and economic activity might even pick up in the near term.
LEADING INDICATORS. Six of the seven components in the leading index increased in April. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — are stock prices, new orders in investment goods industries, consumer confidence, inventory change series*, and gross enterprises and properties income*. New residential construction orders declined in April.
With the 0.8 percent increase in April, the leading index now stands at 99.4 (1990=100). Based on revised data, this index remained unchanged in March and increased 0.8 percent in February. During the six-month span through April, the leading index increased 1.6 percent, with five of the eight 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 April. The positive contributors to the coincident index were retail trade and employed persons. Industrial production and manufacturing sales declined in April.
With the 0.1 percent decrease in April, the coincident index now stands at 108.7 (1990=100). Based on revised data, this index increased 0.3 percent in March and increased 0.2 percent in February. During the six-month period through April, the coincident index increased 0.9 percent, with all of the four components increasing (diffusion index, six-month span equals 75.0 percent).
