The coincident index decreased slightly in June, due primarily to a large drop in retail sales. The six-month growth rate in the index has slowed further to 0.3 percent (about a 0.7 percent annual rate) in June, down from 0.9 percent (a 1.9 percent annual rate) in the second half of 2007, and the weaknesses among the coincident indicators have remained balanced with the strengths in recent months.
The leading index remains on a downtrend that began in mid-2007, and its decline has accelerated this year. The six-month decline in the leading index is the largest since early 1999. Meanwhile, the coincident index has increased very slightly this year, though its growth rate has fallen considerably. Real GDP growth slowed to a 0.9 percent average annual rate during the first half of the year (including a 0.7 percent annual rate in the second quarter), sharply lower than the average annual rate of 2.3 percent for the second half of 2007. The current behavior of the composite indexes suggests that the economy will continue to grow at a sluggish pace in the near term.
LEADING INDICATORS
Three of the seven components that make up the leading index increased in June. The positive contributors - from the largest positive contributor to the smallest - were productivity for the whole economy, the yield spread, and operating surplus of corporations. The negative contributors - from the largest negative contributor to the smallest - were consumer confidence, volume of expected output, stock prices, and order book volume.
With the 1.0 percent decrease in June, the leading index now stands at 124.3 (1990=100). Based on revised data, this index declined 0.6 percent in May and declined 0.6 percent in April. During the six-month span through June, the leading index decreased 3.0 percent, with two of the seven components advancing (diffusion index, six-month span equals 28.6 percent).
COINCIDENT INDICATORS
Two of the four components that make up the coincident index increased in June. The positive contributors - from the larger positive contributor to the smaller - were employment and real household disposable income. Retail sales and industrial production declined.
With the decrease of 0.1 percent in June, the coincident index now stands at 120.1 (1990=100). Based on revised data, this index increased 0.2 percent in May and increased 0.1 percent in April. During the six-month period through June, the coincident index increased 0.3 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).
