* The coincident index increased again in June, and the strength in the index continued to be widespread. At the same time, real GDP grew at a 5.3 percent average annual rate in the first half of 2007 (including a 7.0 percent rate in the second quarter), slightly 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 suggests that the economy is likely to grow at a somewhat moderate rate in the near term.
LEADING INDICATORS.
Four of the seven components that make up the leading index increased in June. The positive contributors — from the largest positive contributor to the smallest — were real exports FOB, stock prices, private construction orders, and letter of credit arrivals. Negative contributors — from the largest negative contributor to the smallest — were the (inverted) index of inventories to shipments, the (inverted) yield of government public bonds, and value of machinery orders.
With the 0.2 percent increase in June, the leading index now stands at 158.5 (1990=100). Based on revised data, this index increased 0.7 percent in May and declined 0.1 percent in April. During the six-month span through June, the leading index increased 0.9 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 June. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — were industrial production, total employment, and monthly cash earnings. The wholesale and retail sales component declined in June.
