The Conference Board Leading Economic Index® (LEI) for China increased 0.5 percent, and The Conference Board Coincident Economic Index® (CEI) also increased 0.5 percent in May.

The Conference Board LEI for China increased again in May following a small gain in April. Total loans issued by financial institutions and floor space started contributed largely to the gain in the index this month, whereas consumer expectations index and the 5000 industry enterprises diffusion index: raw materials supply index continued to fall. With the gain in May, the six-month change in the leading economic index returned to positive territory – it increased by 0.4 percent (a 0.8 percent annual rate) between November 2010 and May 2011. Nevertheless, it is substantially below the 4.0 percent increase (an 8.2 percent annual rate) for the previous six months. The strengths and weaknesses among the leading indicators have remained somewhat balanced in recent months.

The Conference Board CEI for China, a measure of current economic activity, also increased in May. All components except the volume of passenger traffic component advanced this month. Despite the increase in May, the six-month growth rate of the coincident economic index continued to moderate – to 2.8 percent (a 5.7 percent annual rate) in the period through May 2011, down from 5.3 percent (a 11.0 percent annual rate) for the previous six months. The strengths among the coincident indicators have remained widespread in recent months.

The Conference Board LEI for China has resumed its upward trend in the last three months, after staying essentially flat from November through February. The six-month growth rate of the LEI, although still much lower than the second half of last year, has turned positive after briefly dipping below zero in April. In the meantime, The Conference Board CEI for China also continued to increase in May, but its six-month growth rate has moderated from last year as well. Taken together, the recent behavior of the composite indexes and their components so far suggests that economic expansion will continue, albeit at a more moderate pace in the near term.

LEADING INDICATORS.

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

With the increase of 0.5 percent in May, The Conference Board LEI for China now stands at 155.0 (2004=100). Based on revised data, this index increased 0.1 percent in April and increased 0.9 percent in March. During the six-month span through May, The Conference Board LEI for China increased 0.4 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 retail sales of consumer goods, value-added of industrial production, manufacturing employment, and electricity production. Volume of passenger traffic declined in May.

With the increase of 0.5 percent in May, The Conference Board CEI for China now stands at 202.8 (2004=100). Based on revised data, this index increased 1.3 percent in both April and March. During the six-month span through May, The Conference Board CEI for China increased 2.8 percent, and four of the five components advanced (diffusion index, six-month span equals 80.0 percent).