The coincident index increased in April, but there were large downward revisions to this index of current economic conditions in the last four months as actual data for manufacturing sales for the first quarter of 2008 became available. Despite fairly balanced strengths and weaknesses among the coincident components, it continued to fall at about a -0.7 percent rate from October 2007 to April 2008 (about a -1.5 percent annual rate), well below the 1.3 percent annual rate for the period between April 2007 and October 2007.
Although the rate of decline in the leading index has moderated slightly in recent months, it has declined for eight of the last twelve months and it is now 5.2 percent below its recent highest level in December 2006. At the same time, real GDP growth picked up to a 3.3 percent annual rate in the first quarter of 2008, up from the (revised) 1.9 percent average annual rate in the second half of 2007 and the 1.0 percent rate in the first half of the year. Despite stabilizing somewhat in recent months, the weaknesses in the composite indexes suggest that economic growth is likely to be slow in the near term.
LEADING INDICATORS. Four of the ten components that make up the leading index increased in April. The positive contributors to the index — in order from the largest positive contributor to the smallest — include stock prices, dwelling units started, real money supply, and interest rate spread. The negative contributors — in order from the largest negative contributor to the smallest — include the index of overtime worked, the six-month growth rate of labor productivity, the new orders for machinery and construction component, the Tankan business conditions survey, the (inverted) business failures, and real operating profits.
With the decrease of 0.2 percent in April, the leading index now stands at 84 (1990=100). Based on revised data, this index remained unchanged in both March and February. During the six-month span through April, the index decreased 1.1 percent, and three of the ten components advanced (diffusion index, six-month span equals 30.0 percent).
COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in April. The positive contributors to the index — in order from the largest positive contributor to the smallest — include the retail, wholesale, and manufacturing sales component, number of employed persons, and wage and salary income. Industrial production declined in April.
With the increase of 0.3 percent in April, the coincident index now stands at 108.3 (1990=100). Based on revised data, this index decreased 0.8 percent in March and remained unchanged in February. During the six-month span through April, the index decreased -0.7 percent, and two of the four components advanced (diffusion index, six-month span equals 50.0 percent).
