The coincident index also declined in September, and the wage and salary income component was the only positive contributor to the coincident index this month. Despite this month's decline, the six-month growth rate of the coincident index has remained within the 0.5 to 1.5 percent range (about a 1.5 - 2.5 percent annual rate) since early 2006.
The leading index grew rapidly through mid-2006, reaching a six-month growth rate of about 5.0 percent (annual rate) in the first half of 2006, but its growth rate has been gradually declining, and became negative in early 2007. However, the weakness has not been consistently widespread so far, and it has been mainly concentrated in housing, stock prices, and new orders for machinery and construction. At the same time, real GDP declined in the second quarter at a -1.2 percent annual rate. The behavior of the composite indexes so far suggest that economic activity is likely to grow in the near term, but at a sluggish pace, and continued weakness among the leading indicators should be monitored closely in the coming months.
LEADING INDICATORS
Eight of the ten components that make up the leading index increased in September. The positive contributors to the index - in order from the largest positive contributor to the smallest - include the new orders for machinery and construction component, real money supply, interest rate spread, the six-month growth rate of labor productivity, the (inverted) business failures, stock prices, real operating profits, and the index of overtime worked. The negative contributors - in order from the larger negative contributor to the smaller - include dwelling units started and the Tankan business conditions survey.
With the decrease of 1.3 percent in September, the leading index now stands at 85.6 (1990=100). Based on revised data, this index decreased 0.7 percent in August and decreased 0.9 percent in July. During the six-month span through September, the index decreased 1.4 percent, and six of the ten components advanced (diffusion index, six-month span equals 65.0 percent).
COINCIDENT INDICATORS
Only one of the four components that make up the coincident index increased in September. The positive contributor was wage and salary income. Number of employed persons, industrial production, and the retail, wholesale, and manufacturing sales component declined in September.
With the decrease of 0.3 percent in September, the coincident index now stands at 108.5 (1990=100). Based on revised data, this index increased 0.2 percent in August and declined 0.1 percent in July. During the six-month span through September, the index increased 0.8 percent, and three of the four components advanced (diffusion index, six-month span equals 75.0 percent).
