The Conference Board Leading Economic Index® (LEI) for China increased 0.8 percent, and The Conference Board Coincident Economic Index® (CEI) increased 0.9 percent in May.

The Conference Board LEI for China increased again in May, following no change in April. Apart from the 5000 industry enterprises diffusion index: raw materials supply component, all the leading indicators contributed positively to the index this month. The six-month growth rate of the leading economic index has moderated to 3.2 percent (a 6.5 percent annual rate) in the period through May 2010, down from 4.1 percent (about an 8.7 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have become less widespread, and have become balanced with the weaknesses in recent months.

The Conference Board CEI for China, a measure of current economic activity, also increased in May. Except for the volume of passenger traffic, all the coincident indicators made positive contributions to the index this month. With May’s gain, the six-month growth in the coincident economic index stands at 6.7 percent (a 13.9 percent annual rate) in the period through May 2010 –the same rate as the previous six months. Moreover, the strengths among the coincident indicators have remained very widespread, with all the components advancing in recent months.

The Conference Board LEI for China continued to increase in May. However, the strengths among its components have become less widespread, and its six-month growth rate has moderated considerably from the third quarter of last year. At the same time, The Conference Board CEI for China has remained on an upward trend, amid very widespread strength among its components. All in all, the behavior of the composite indexes and their components suggest that China’s economic expansion should continue, but growth in economic activity is likely to moderate in coming months.

LEADING INDICATORS

Five of the six components that make up The Conference Board LEI for China increased in May. The positive contributors to the index – in order from the largest positive contributor to the smallest – include total loans issued by financial institutions, total floor space started, the consumer expectations index, the PMI new export order index, and the (inverted) PMI supplier delivery index. The 5000 industry enterprises diffusion index: raw materials supply index declined in May.

With the increase of 0.8 percent in May, The Conference Board LEI for China now stands at 145.8 (2004=100). With revisions, this index remained unchanged in April and increased 0.7 percent in March. During the six-month span through May, The Conference Board LEI for China increased 3.2 percent, and three of the six components advanced (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS

Four of the five components that make up The Conference Board CEI for China increased in May. The positive contributors to the index – in order from the largest positive contributor to the smallest – include manufacturing employment, retail sales of consumer goods, value-added industrial production, and electricity production. Volume of passenger traffic declined in May.

With the increase of 0.9 percent in May, The Conference Board CEI for China now stands at 184.6 (2004=100). This index increased 1.4 percent in April and increased 0.5 percent in March. During the six-month span through April, The Conference Board CEI for China increased 6.7 percent, and all five components advanced (diffusion index, six-month span equals 100.0 percent).