eight out of ten components in the leading index declined. The leading
index fell or remained unchanged in four of the last six months. The
growth rate of the leading index has been slowing gradually in the
first half of the year, and with July's decline, the leading index is
now 0.3 percent below its level in January. In addition, the strengths
among the leading indicators have gradually become less widespread in
recent months.
- The coincident index declined slightly in July after being essentially
flat since the beginning of 2006. The real retail, wholesale, and
manufacturing sales and employment components were the main
contributors to the weakness in the coincident index in the first half
of the year. At the same time, real GDP growth slowed to a 0.8 percent
annual rate in the second quarter of 2006, down from the 2.7 percent
rate in the first quarter and the 2.6 percent average rate in the
previous two quarters. The behavior of the leading index so far still
suggests that economic growth should continue, but it's likely to be
slow to moderate in the near term.
LEADING INDICATORS. One of the ten components that make up the leading index increased in July. The positive contributor to the index occurred in stock prices. The negative contributors -- in order from the largest negative contributor to the smallest -- include the new orders for machinery and construction component*, dwelling units started, interest rate spread, real money supply, the six month growth rate of labor productivity, the (inverted) business failures*, real operating profits*, and the index of overtime worked. The Tankan business conditions survey remained unchanged in July.
With the decrease of 0.5 percent in July, the leading index now stands at 101.1 (1990=100). Based on revised data, this index remained unchanged in June and decreased 0.3 percent in May. During the six-month span through July, the index decreased 0.3 percent, and five of the ten components advanced (diffusion index, six-month span equals 50.0 percent).
COINCIDENT INDICATORS. Two of the four components that make up the coincident index decreased in July. The positive contributors to the index -- in order from the larger positive contributor to the smaller -- include the retail, wholesale, and manufacturing sales* component and wage and salary income*. Industrial production and number of employed persons declined in July.
With the decrease of 0.1 percent in July, the coincident index now stands at 105.9 (1990=100). Based on revised data, this index remained unchanged in June and decreased 0.1 percent in May. During the six-month span through July, the index increased 0.1 percent, and two of the four components advanced (diffusion index, six-month span equals 62.5 percent).
