* The leading index increased again in February, and it has been
increasing steadily for the last nine months. With February's gain, the
growth rate of the leading index has continued to increase steadily as
well. The leading index is growing at about a 4.5 to 5.5 percent annual
rate in recent months, up from zero to slightly negative growth at the
end of 2004. This growth rate is only slightly below the most recent
high growth of 7.0 percent reached in the first half of 2004, and the
strength among the leading indicators continued to be widespread in
recent months.
* The coincident index increased slightly again in February, and it has
been on an upward trend since early 2005. At the same time, real GDP
grew at a 3.1 percent average annual rate in the second half of 2005
(including a 5.4 percent rate in the fourth quarter), down slightly from
the 5.6 percent average rate in the first half of the year. The
continued widespread strength in the leading index suggests that strong
economic growth should continue in the first half of 2006.
LEADING INDICATORS. Eight of the ten components that make up the leading index increased in February. The positive contributors to the index - in order from the largest positive contributor to the smallest - include the (inverted) business failures*, real money supply, the Tankan business conditions survey, dwelling units started, yield spread, the new orders for machinery and construction component*, the six month growth rate of labor productivity, and the index of overtime worked. Stock prices remained unchanged, while real operating profits* declined in February.
With the increase of 0.4 percent in February, the leading index now stands at 101.9 (1990=100). Based on revised data, this index increased 0.5 percent in January and increased 0.4 percent in December. During the six-month span through February, the index increased 2.5 percent, and seven of the ten components advanced (diffusion index, six-month span equals 70.0 percent).
COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in February. The positive contributors to the index - in order from the largest positive contributor to the smallest - include number of employed persons, the retail, wholesale, and manufacturing sales* component, and wage and salary income*. Industrial production declined in February.
With the increase of 0.1 percent in February, the coincident index now stands at 106.0 (1990=100). Based on revised data, this index increased 0.2 percent in both January and December. During the six-month span through February, the index increased 0.8 percent, and three of the four components advanced (diffusion index, six-month span equals 75.0 percent).
DATA AVAILABILITY AND NOTES. The data series used to compute the two composite indexes reported in this release are those available "as of" 5:00 P.M. ET April 5. Some series are estimated as noted below.
* The series in the leading index that are based on The Conference Board estimates are real operating profits, new orders for machinery, and the six month growth rate of labor productivity. The series in the coincident index that are based on The Conference Board estimates are real manufacturing sales and wage and salary income.
Summary Table of Composite Indexes
2005 2006 6-month
Dec. Jan. Feb. Aug. to Feb.
Leading index 101.0 p 101.5 p 101.9 p
Percent Change +0.4 p +0.5 p +0.4 p +2.5 p
Diffusion 65.0 70.0 75.0 70.0
Coincident Index 105.7 p 105.9 p 106.0 p
Percent Change +0.2 p +0.2 p +0.1 p +0.8 p
Diffusion 62.5 75.0 62.5 75.0
n.a. Not available p Preliminary r Revised
Indexes equal 100 in 1990
Source: The Conference Board