The coincident index increased again in December, and the strengths among its components remained fairly widespread. Employment made the largest positive contribution to the index this month, as it has in recent months, and retail sales was the only negative contributor. The coincident index increased 0.8 percent (a 1.7 percent annual rate) from June to December, in line with the six-month growth rate of the index in recent months.
The leading index has gradually declined since the middle of 2007, while the coincident index has continued to increase at a steady pace in the second half of 2007 following an acceleration in its growth in the first half. Meanwhile, real GDP grew at a 2.5 percent annual rate in the fourth quarter of 2007, matching the growth rate in the third quarter, but below the 3.3 percent average annual rate of growth that prevailed in the first half of 2007. The recent behavior of the composite indexes suggests that economic activity is likely to grow at a slow to moderate pace in the near term.
LEADING INDICATORS. Three of the seven components that make up the leading index increased in December. The positive contributors — from the largest positive contributor to the smallest — were productivity for the whole economy, stock prices, and operating surplus of corporations. The negative contributors — from the largest negative contributor to the smallest — were volume of expected output, order book volume, consumer confidence, and yield spread.
With the 0.4 percent decrease in December, the leading index now stands at 128.3 (1990=100). Based on revised data, this index declined 0.3 percent in November and increased 0.1 percent in October. During the six-month span through December, the leading index decreased 1.0 percent, with three of the seven components advancing (diffusion index, six-month span equals 42.9 percent).
COINCIDENT INDICATORS. Two of the four components that make up the coincident index increased in December. The positive contributors — from the largest positive contributor to the smallest — were employment and real household disposable income. Retail sales declined and industrial production remained unchanged in December. With the increase of 0.1 percent in December, the coincident index now stands at 119.6 (1990=100). Based on revised data, this index increased 0.2 percent in November and increased 0.2 percent in October. During the six-month period through December, the coincident index increased 0.8 percent, with three of the four components advancing (diffusion index, six-month span equals 87.5 percent).
