The coincident index increased again in March and employment continued to make the largest positive contribution to the index this month. The index increased 1.2 percent (a 2.4 percent annual rate) from September 2007 to March 2008, in line with its six-month growth rate in the second half of 2007. In addition, the strengths among the components have remained widespread in recent months.
Following a period of fairly rapid growth in the first half of 2007, the leading index has been on a general downtrend since the middle of last year, but this decline has not been very deep so far. Meanwhile, the coincident index, a measure of current economic activity, has been rising steadily since the beginning of 2007. During the first quarter of the year, real GDP growth slowed to a 1.8 percent annual rate, down from an average annual rate of 2.5 percent in the second half of 2007. The recent behavior of the leading and coincident indexes suggests that the slowdown in economic activity is likely to continue in the near term.
LEADING INDICATORS
Four of the seven components that make up the leading index increased in March. The positive contributors - from the largest positive contributor to the smallest - were volume of expected output, order book volume, productivity for the whole economy and operating surplus of corporations. The negative contributors - from the largest negative contributor to the smallest - were consumer confidence, stock prices, and the yield spread.
With the 0.1 percent increase in March, the leading index now stands at 127.7 (1990=100). Based on revised data, this index declined 0.3 percent in February and declined 0.3 percent in January. During the six-month span through March, the leading index decreased 1.1 percent, with three of the seven components advancing (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS
Two of the four components that make up the coincident index increased in March. The positive contributors - from the larger positive contributor to the smaller - were employment and real household disposable income. Retail sales declined and industrial production remained unchanged in March. With the increase of 0.1 percent in March, the coincident index now stands at 120.5 (1990=100). Based on revised data, this index increased 0.2 percent in February and increased 0.2 percent in January. During the six-month period through March, the coincident index increased 1.2 percent, with four of the four components advancing (diffusion index, six-month span equals 100.0 percent).
