The coincident index increased in May, driven primarily by a large increase in retail sales. The six-month growth rate in the index stands at 0.5 percent (a 1.0 percent annual rate) in the six-month span through May, modestly lower than the growth of 0.9 percent (a 1.9 percent annual rate) from June 2007 to December 2007. In addition, the weaknesses among the coincident indicators have grown more widespread and have become balanced with the strengths in recent months.
The leading index continues to be on a downward trend that began in the middle of 2007, and the weaknesses among its components have also become more widespread in recent months. The coincident index, a measure of current economic activity, has inched up only slightly so far in 2008, after increasing steadily throughout last year. Meanwhile, real GDP growth has been slowing, falling to a 1.8 percent annual rate in the first quarter of 2008, down from an average annual rate of 2.5 percent in the second half of 2007 and an average annual rate of 3.1 percent in the first half of 2007. The current behavior of the composite indexes continues to suggest that the economy will grow at a slow pace in the near term.
LEADING INDICATORS. Two of the seven components that make up the leading index increased in May. The positive contributors — from the larger positive contributor to the smaller — were stock prices, and productivity for the whole economy*. The negative contributors — from the largest negative contributor to the smallest — were order book volume, consumer confidence, volume of expected output, and the yield spread. The gross operating surplus of corporations remained unchanged in May.
With the 0.6 percent decrease in May, the leading index now stands at 125.5 (1990=100). Based on revised data, this index declined 0.6 percent in April and declined 0.1 percent in March. During the six-month span through May, the leading index decreased 2.6 percent, with one of the seven components advancing (diffusion index, six-month span equals 14.3 percent).
COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in May. The positive contributors — from the largest positive contributor to the smallest — were retail sales, employment , and real household disposable income. Industrial production declined.
With the increase of 0.2 percent in May, the coincident index now stands at 120.2 (1990=100). Based on revised data, this index increased 0.1 percent in April and remained unchanged in March. During the six-month period through May, the coincident index increased 0.5 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).
