New York, NY, November 18-- The Conference Board announced today that the U.S. leading index decreased 0.3 percent, falling for the fifth consecutive month.
The Conference Board said the decline and the weakness in recent months has become more widespread.
The major contributors to October's decline were the real money supply, the interest rate spread, and consumer expectations.
However, the recent declines in the leading index have not been large enough nor have they persisted for long enough to signal an end to the current economic expansion.
The coincident index, an index of current economic activity, increased again in October and its growth continues to be widespread. At the same time, real GDP growth picked up slightly to a 3.7 percent annual rate in the third quarter from 3.3 percent in the second quarter.
While the leading index is not yet signaling a downturn in the economy, the growth rate of the leading index has slowed below its long-term trend growth rate. This is consistent with real GDP continuing to grow in the near term, but more slowly than its long-term trend rate.
Three of the ten indicators that make up the leading index increased in October. The positive contributors - beginning with the largest positive contributor – were average weekly initial claims for unemployment insurance (inverted), manufacturers’ new orders for consumer goods and materials, and stock prices.
The negative contributors - beginning with the largest negative contributor – were index of consumer expectations, real money supply, interest rate spread, vendor performance, average weekly manufacturing hours, building permits, and manufacturers’ new orders for nondefense capital goods.
The leading index now stands at 115.1 (1996=100). Based on revised data, this index decreased 0.3 in October and decreased 0.3 percent in September. During the six-month span through October, the leading index decreased 0.7 percent, with three out of ten components advancing (diffusion index, six-month span equals thirty-five percent).
All four indicators that make up the coincident index increased in October. The positive contributors to the index - beginning with the largest positive contributor - were employees on nonagricultural payrolls, industrial production, personal income less transfer payments, and manufacturing and trade sales.
The coincident index now stands at 118.3 (1996=100). This index increased 0.3 percent in October and increased 0.1 percent in September. During the six-month period through October, the coincident index increased 1.0 percent.
The lagging index stands at 98.5 (1996=100) in October, with four of the seven components advancing. The positive contributors to the index – beginning with the largest positive contributor – were commercial and industrial loans outstanding, average prime rate charged by banks, ratio of consumer installment credit to personal income, and ratio of manufacturing and trade inventories to sales. The negative contributors were change in CPI for services and change in labor cost per unit of output. The average duration of unemployment (inverted) held steady in October. Based on revised data, the lagging index increased 0.2 percent in October and increased 0.1 percent in September.
