The coincident index increased slightly in October, after remaining unchanged in the previous two months. The six-month change in the coincident index has fallen to -0.1 percent (a -0.2 percent annual rate) for the period ending in October 2008, down from 0.7 percent (a 1.3 percent annual rate) between October 2007 to April 2008. However, the strengths and weaknesses among the coincident indicators have remained balanced in recent months. Meanwhile, real GDP contracted at a 2.1 percent annual rate in the third quarter, the first time since the early 1990's that its growth rate has turned negative.
The leading index has been falling for more than a year now, and the pace of its decline has picked up sharply in recent months, while the weaknesses among its components have remained very widespread. The coincident index, a measure of current economic activity, has weakened this year, with the six-month rate of change becoming negative. The accelerating and widespread decline in the leading index suggests that the economy will remain weak going into 2009, and that the contraction in economic activity may deepen in the near term.
LEADING INDICATORS
Two of the seven components that make up the leading index increased in October. The positive contributors - from the larger positive contributor to the smaller - were productivity for the whole economy and operating surplus of corporations. The negative contributors - from the largest negative contributor to the smallest - were stock prices, order book volume, volume of expected output, and consumer confidence. The yield spread remained unchanged in October.
With the 1.7 percent decrease in October, the leading index now stands at 118.7 (1990=100). Based on revised data, this index declined 1.1 percent in September and declined 0.6 percent in August. During the six-month span through October, the leading index decreased 5.7 percent, with two of the seven components advancing (diffusion index, six-month span equals 28.6 percent).
COINCIDENT INDICATORS
Three of the four components that make up the coincident index increased in October. The positive contributors - from the largest positive contributor to the smallest - were employment, real household disposable income, and industrial production. Retail sales declined in October.
With the increase of 0.1 percent in October, the coincident index now stands at 120.1 (1990=100). Based on revised data, this index remained unchanged in September and in August. During the six-month period through October, the coincident index decreased 0.1 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).
