The Conference Board announced that the leading index for Korea declined 0.1 percent, while the coincident index increased 0.4 percent in February.



The leading index declined slightly in February, and there were small downward revisions to the previous two months as a result of data revisions in the value of machinery orders component. Despite the small decline in February, the six-month growth rate of the leading index has continued to fluctuate around 1.5 to 3.0 percent in the last five months (a 3.0 to 6.0 percent annual rate), slightly down from the 5.0 to 6.0 percent annual rate through mid-2006. In addition, the strengths and weaknesses among the leading indicators have been somewhat balanced in the last several months.

The coincident index increased again in February, continuing to grow on an upward trend. The strength in the coincident index has also been widespread in the last several months. At the same time, real GDP grew at a 3.9 percent average annual rate in the second half of 2006 (including a 3.4 percent rate in the fourth quarter), slightly down from the 4.1 percent average annual rate in the first half of the year. Despite short-term volatility, the recent behavior in the leading index still suggests that moderate to strong economic growth is likely to continue in the near term.

LEADING INDICATORS. Two of the seven components that make up the leading index increased in February. The positive contributors — from the larger positive contributor to the smaller — were stock prices and the (inverted) yield of government public bonds. Letter of credit arrivals, the (inverted) index of inventories to shipments, real exports FOB, and private construction orders declined in February.

With the 0.1 percent decrease in February, the leading index now stands at 158.2 (1990=100). Based on revised data, this index increased 1.0 percent in January and declined 0.4 percent in December. During the six-month span through February, the leading index increased 1.5 percent, with three of the seven components advancing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. All four components that make up the coincident index increased in February. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — were the wholesale and retail sales component, industrial production, total employment, and monthly cash earnings.

With the 0.4 percent increase in February, the coincident index now stands at 166.4 (1990=100). Based on revised data, this index increased 0.2 percent in January and decreased 0.2 percent in December. During the six-month span through February, the coincident index increased 0.9 percent, with three of the four components advancing (diffusion index, six-month span equals 75.0 percent).