The coincident index, a measure of current economic activity, increased slightly in May, its fifth increase in the past six months. Final household consumption* made the largest positive contribution to the index this month, while industrial production excluding construction made the largest negative contribution. The coincident index has increased by 0.5 percent during the past six months (about a 1.0 percent annual rate), slightly above the 0.9 percent annual rate of growth during the second half of 2007. In addition, the strengths among the coincident indicators have remained slightly more widespread than the weaknesses in recent months.
After increasing steadily for the past three years, the leading index has fallen precipitously during 2008. The decline in the index over the past six months is the largest since the recession in 1992-93. Meanwhile, the coincident index has continued to grow at a slow pace during the past year. Real GDP growth has declined sharply from a 3.0 percent average annual rate during the second half of 2007 to a 1.0 percent annual rate in the first quarter of 2008. Taken together, the recent behavior of the leading and coincident indexes suggests that economic growth is likely to remain slow in the near term.
LEADING INDICATORS. The Spanish contribution to Euro M2 was the only positive contributor in May among the six components that make up the leading index. The negative contributors — in order from the largest negative contributor to the smallest — are job placings, order books survey, the capital equipment component of industrial production, the inverted long-term government bond yield, and the Spanish equity price index.
With the decrease of 0.7 percent in May, the leading index now stands at 156.2 (1990=100). Based on revised data, this index remained unchanged in April and declined 0.8 percent in March. During the six-month span through May, the index decreased 1.2 percent, and one of the six components advanced (diffusion index, six-month span equals 16.7 percent).
COINCIDENT INDICATORS. Three of the five components that make up the coincident index increased in May. The positive contributors — in order from the largest positive contributor to the smallest — are final household consumption, employment, and real imports. Industrial production excluding construction, and retail sales survey declined in May.
With the increase of 0.1 percent in May, the coincident index now stands at 159.1 (1990=100). Based on revised data, this index increased 0.2 percent in April and decreased 0.2 percent in March. During the six-month span through May, the index increased 0.5 percent, and three of the five components advanced (diffusion index, six-month span equals 60.0 percent).
