The coincident index increased slightly in October, following a slight decrease in September. Despite some short-term volatility, this index of current economic activity has been on a slightly rising trend since mid-2003, but its growth has moderated slightly (from about a 2.0 percent annual growth rate at the beginning of 2006 down to less than 1.0 percent growth) in recent months.
The growth rate of the leading index picked up through mid-2006, but it has moderated in recent months. At the same time, real GDP decreased at a 0.1 percent annual rate in the third quarter of 2006, following a 3.4 percent annual rate in the first half of 2006. The recent behavior of the leading index so far still suggests that economic growth is likely to continue, but at a slow to moderate rate in the near term.
LEADING INDICATORS. Four of the seven components of the leading index increased in October. The positive contributors to the index — in order from the largest positive contributor to the smallest — are production expectations, the stock price index, the yield spread, and the ratio of the deflator of manufacturing value added to unit labor cost for manufacturing*. The negative contributors to the index — beginning with the largest negative contributor — are the inverted new unemployment claims, industrial new orders, and building permits (residential).
With the decrease of 0.4 percent in October, the leading index now stands at 129.2 (1990=100). Based on revised data, this index increased 0.2 percent in September and increased 0.1 percent in August. During the six-month span through October, the leading index increased 0.7 percent, and three of the seven components increased (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS. Three of the four components of the coincident index increased in October. The positive contributors to the index were wage and salaries*, personal consumption, and employment*. Industrial production declined in October.
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With the increase of 0.1 percent in October, the coincident index now stands at 119.9 (1990=100). Based on revised data, this index decreased 0.1 percent in September and increased 0.2 percent in August. During the six-month period through October, the coincident index increased 0.3 percent, with all four series making a positive contribution (diffusion index, six-month span equals 100.0 percent).
