The coincident index was unchanged for the second straight month in June. Employment rebounded from May’s fall while retail sales resumed its downward trend. The six-month change in the index has slowed to 0.4 percent (a 0.8 percent annual rate), less than half the increase of 1.0 percent (a 2.1 percent annual rate) in the second half of last year. However, the strengths among the coincident indicators were more widespread than the weaknesses over the past six months.
The leading index has been on a moderate downtrend since the start of the year, after rising steadily in the second half of 2007. Meanwhile, the coincident index has been flat in recent months, and is only slightly higher than its level in January. At the same time, real GDP growth has slowed sharply - to a 2.6 percent average annual rate for the first quarter of 2008 and the fourth quarter of 2007, down from a 4.7 percent average annual rate in the previous two quarters. All in all, the current behavior of the composite indexes suggests that economic growth should slow further in the near term.
LEADING INDICATORS
Four of the seven components in the leading index increased in June. The positive contributors to the index - in order from the largest positive contributor to the smallest - are money supply, building approvals, the sales to inventories ratio, and gross operating surplus. Share prices, rural goods exports and yield spread declined. With the 0.5 percent decrease in June, the leading index now stands at 184.0 (1990=100). Based on revised data, this index declined 0.1 percent in May and increased 0.3 percent in April. During the six-month period through June, the leading index decreased 1.3 percent, and four of the seven components increased (diffusion index, six-month span equals 57.1 percent).
COINCIDENT INDICATORS
Two of the four components in the coincident index increased in June. The increases - in order from the larger positive contributor to the smaller - occurred in employed persons and household gross disposable income. Retail trade declined and industrial production remained unchanged.
Remaining unchanged in June, the coincident index now stands at 145.1 (1990=100). Based on revised data, this index was also unchanged in May and increased 0.1 percent in April. During the six-month period through June, the coincident index increased 0.4 percent, with three of the four components in the series making positive contributions (diffusion index, six-month span equals 75.0 percent).
