The Conference Board announced that the leading index for Korea increased 0.2 percent, while the coincident index increased 0.4 percent in July.

The leading index increased slightly again in July, and there were slight upward revisions to the leading index in the previous two months as a result of data revisions. The stock price index, letter of credit arrivals, and real exports continued to make large positive contributions to the index, offsetting large declines in private construction orders and value of machinery orders. With this month's gain, the leading index increased 1.3 percent (a 2.7 percent annual rate) from January to July. The strengths and weaknesses among the leading indicators continued to be somewhat balanced in the last several months.

The coincident index also increased again in July, and its six-month growth rate has picked up somewhat in recent months. Industrial production continued to make the largest positive contributions to the coincident index. In addition, the strength in the index continued to be widespread in recent months.

Although the leading index picked up from negative growth earlier this year, its six month growth rate is still well below the 2.0-4.0 percent rate (3.0 to 5.0 percent annual rate) reached in late 2006. At the same time, real GDP grew at a 5.5 percent average annual rate in the first half of 2007 (including a 7.4 percent rate in the second quarter), up from a 4.4 percent average annual rate in the second half of 2006. Despite short-term volatility, the recent behavior in the leading index so far still suggests that economic growth is likely to continue at a moderate rate in the near term.

LEADING INDICATORS

Four of the seven components that make up the leading index increased in July. The positive contributors — from the largest positive contributor to the smallest — were stock prices, letter of credit arrivals, real exports FOB, and the (inverted) index of inventories to shipments. The negative contributors — from the largest negative contributor to the smallest — were private construction orders, value of machinery orders, and the (inverted) yield of government public bonds.

With the 0.2 percent increase in July, the leading index now stands at 160.4 (1990=100). Based on revised data, this index increased 0.2 percent in June and increased 1.8 percent in May. During the six-month span through July, the leading index increased 1.3 percent, with four of the seven components advancing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS

Three of the four components that make up the coincident index increased in July. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — were industrial production, total employment, and the wholesale and retail sales component. Monthly cash earnings declined in July.

With the 0.4 percent increase in July, the coincident index now stands at 169.0 (1990=100). Based on revised data, this index increased 0.5 percent in June and increased 0.1 percent in May. During the six-month span through July, the coincident index increased 1.9 percent, with three of the four components advancing (diffusion index, six-month span equals 87.5 percent).