New York, NY, April 20, 2006--The Conference Board announced today that the U.S. leading index decreased 0.1 percent, the coincident index increased 0.2 percent and the lagging index increased 0.3 percent in March.
The leading index decreased slightly in March, and February's decrease was revised down due to data revisions in several underlying components. Despite the weakness in the leading index in February and March, its six month growth rate picked up to an average of 3.2 percent annual rate in the first quarter, up from an average growth rate of 2.7 percent in the fourth quarter, which was higher than its average growth of 1.8 percent in 2005. In addition, the strengths among the leading indicators have been widespread in recent months.
The coincident index increased again in March, and it has been increasing steadily since September 2005. The six month growth rate of the coincident index picked up to a range of 3.0 to 4.0 percent annual rate in the first quarter, up from an average growth of about 2.0 percent in the fourth quarter of 2005, and the strengths among the coincident indicators have been widespread in recent months.
The growth of the leading index has slowed steadily since mid-2004 while fluctuating around a moderate upward trend. At the same time, economic activity has slowed from strong to more moderate growth through the first quarter. The current behavior of the leading index suggests economic growth should continue moderately in the near term.
Five of the ten indicators that make up the leading index increased in March. The positive contributors - beginning with the largest positive contributor - were vendor performance, stock prices, index of consumer expectations, manufacturers' new orders for consumer goods and materials*, and interest rate spread. The negative contributors--beginning with the largest negative contributor-- were building permits, average weekly initial claims for unemployment insurance (inverted), manufacturers' new orders for nondefense capital goods,* and real money supply.* The average weekly manufacturing hours held steady in March.
The leading index now stands at 138.4 (1996=100). Based on revised data, this index decreased 0.5 percent in February and increased 0.4 percent in January. During the six-month span through March, the leading index increased 1.9 percent, with seven out of ten components advancing (diffusion index, six-month span equals seventy percent).
All four indicators that make up the coincident index increased in March. The positive contributors to the index --beginning with the largest positive contributor--were industrial production, employees on nonagricultural payrolls, personal income less transfer payments,* and manufacturing and trade sales*.
The coincident index now stands at 122.4 (1996=100). This index increased 0.2 percent in February and increased 0.1 percent in January. During the six-month period through March, the coincident index increased 1.9 percent.
The lagging index stands at 122.9 (1996=100) in March, with five of the seven components advancing. The positive contributors to the index--beginning with the largest positive contributor--were average duration of unemployment (inverted), change in labor cost per unit of output,* ratio of manufacturing and trade inventories to sales,* ratio of consumer installment credit to personal income,* and average prime rate charged by banks. The negative contributor was the change in CPI for services. The commercial and industrial loans outstanding* held steady in March. Based on revised data, the lagging index increased 0.1 percent in February and increased 0.4 percent in January.
