The Conference Board Leading Economic Index® (LEI) for Korea increased 1.1 percent and The Conference Board Coincident Economic Index® (CEI) for Korea declined 0.2 percent in October.

The Conference Board LEI for Korea increased sharply again in October, with the letter of credit arrivals and real exports FOB making the largest positive contributions to the index. The leading economic index grew by 1.0 percent (about a 1.9 percent annual rate) in the six-month period through October 2010, substantially slower than the increase of 4.9 percent (about a 10.1 percent annual rate) for the previous six months, but an improvement from the six-month growth rate in recent months. In addition, the strengths among the leading indicators have become more widespread over the past six months.

The Conference Board CEI for Korea, a measure of current economic activity, fell for the third consecutive month in October. Industrial production fell sharply this month. With the decline in October, the six-month growth rate of the coincident economic index continued to slow, to 0.9 percent (about a 1.8 percent annual rate) from April to October 2010, down from 1.6 percent (about a 3.3 percent annual rate) for the previous six months. At the same time, real GDP grew at a 3.0 percent annual rate in the third quarter of 2010, slower than the growth of 5.8 percent annual rate in the second quarter and 8.8 percent annual rate during the first quarter.

The Conference Board LEI for Korea increased in both September and October, after declining for three consecutive months. As a result, its six-month growth rate has picked up slightly, although it is still well below that of early 2010. Meanwhile, The Conference Board CEI for Korea has decreased for the past three months, and its six-month growth rate has continued to slow. Taken together, the current behavior of the composite indexes and their components suggest that the weakness in current conditions may not last, but that economic growth will likely be modest in the near term.

LEADING INDICATORS

Five of the seven components that make up The Conference Board LEI for Korea increased in October. The positive contributors - from the largest positive contributor to the smallest – were letter of credit arrivals, real exports FOB, the (inverted) yield of government public bonds, the (inverted) index of inventories to shipments, and stock prices. Negative contributors – from the larger negative contributor to the smaller – were private construction orders and value of machinery orders.

With the 1.1 percent increase in October, The Conference Board LEI for Korea now stands at 116.4 (2004=100). Based on revised data, this index increased 0.8 percent in September and declined 0.8 percent in August. During the six-month span through October, the leading economic index increased 1.0 percent, with four of the seven components advancing (diffusion index, six-month span equals 71.4 percent).

COINCIDENT INDICATORS

Two of the four components that make up The Conference Board CEI for Korea increased in October. The positive contributors were the wholesale and retail sales component and monthly cash earnings. Industrial production and total employment declined in October.

With the 0.2 percent decrease in October, The Conference Board CEI for Korea now stands at 112.5 (2004=100). Based on revised data, this index decreased 0.2 percent in September and decreased 0.3 percent in August. During the six-month span through October, the coincident economic index increased 0.9 percent, with three of the four components advancing (diffusion index, six-month span equals 75.0 percent).