The Conference Board announced that the leading index for Korea increased 0.5 percent, while the coincident index increased 0.2 percent in May.



The leading index increased sharply in May following three consecutive declines. Stock prices, index of inventories to shipments (inverted), and value of machinery orders were the largest positive contributions to the index this month. The six-month growth rate of the leading index has slowed to a 0.1 percent rate (a 0.1 percent annual rate) in May. Although this is an improvement from the -0.7 percent rate in March, it is well below the 2.0-4.0 percent rate in late 2006. However, the strengths and weaknesses among the leading indicators have become somewhat balanced in the last two months.

The coincident index increased again in May, and the strength in the index continued to be widespread. At the same time, real GDP grew at a 3.6 percent annual rate in the first quarter of 2007, slightly down from a 4.4 percent average annual rate in the second half of 2006. Despite the increase in May, the moderation in the growth rate of the leading index since late 2006 so far suggests that slow to moderate economic growth is likely to continue in the near term.

LEADING INDICATORS. Four of the seven components that make up the leading index increased in May. The positive contributors — from the largest positive contributor to the smallest — were stock prices, the (inverted) index of inventories to shipments, value of machinery orders, and real exports FOB. Negative contributors — from the largest negative contributor to the smallest — were private construction orders, the (inverted) yield of government public bonds, and letter of credit arrivals.

With the 0.5 percent increase in May, the leading index now stands at 157.7 (1990=100). Based on revised data, this index declined 0.2 percent in April and declined 0.6 percent in March. During the six-month span through May, the leading index increased 0.1 percent, with three of the seven components advancing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in May. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — were the wholesale and retail sales component, industrial production, and total employment. Monthly cash earnings declined in May.

With the 0.2 percent increase in May, the coincident index now stands at 167.6 (1990=100). Based on revised data, this index increased 1.0 percent in April and decreased 1.3 percent in March. During the six-month span through May, the coincident index increased 0.9 percent, with three of the four components advancing (diffusion index, six-month span equals 75.0 percent).