The coincident index increased again in December. From June to December, this index of current economic activity grew at a 1.1 percent rate (a 2.1 percent annual rate). The strengths among the coincident indicators have been widespread in recent months.
The growth rate of the leading index has improved slightly recently, but the index is still 0.4 percent below its most recent high in January 2006. At the same time, real GDP growth slowed to a 2.0 percent (annual) rate in the third quarter of 2006, following a 2.6 percent gain in the second quarter. The recent behavior of the leading index still suggests that slow to moderate economic growth is likely to continue in the near term.
LEADING INDICATORS. Six of the ten indicators that make up the leading index increased in December. The positive contributors — beginning with the largest positive contributor — were building permits, average weekly initial claims for unemployment insurance (inverted), real money supply* , stock prices, vendor performance and manufacturers' new orders for nondefense capital goods*. The negative contributors — beginning with the largest negative contributor — were interest rate spread and index of consumer expectations. The average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials* held steady in December.
The leading index now stands at 138.0 (1996=100). Based on revised data, this index remained unchanged in November and decreased 0.1 percent in October. During the six-month span through December, the leading index increased 0.1 percent, with four out of ten components advancing (diffusion index, six-month span equals forty percent).
COINCIDENT INDICATORS. All four of the indicators that make up the coincident index increased in December. 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 123.3 (1996=100). This index increased 0.2 percent in November and increased 0.2 percent in October. During the six-month period through December, the coincident index increased 1.1 percent.
LAGGING INDICATORS. The lagging index stands at 127.3 (1996=100) in December, with five of the seven components advancing. The positive contributors to the index — beginning with the largest positive contributor — were commercial and industrial loans outstanding*, average duration of unemployment (inverted), change in labor cost per unit of output*, ratio of consumer installment credit to personal income* and ratio of manufacturing and trade inventories to sales*. The average prime rate charged by banks and change in CPI for services* held steady in December. Based on revised data, the lagging index increased 0.6 percent in November and increased 0.1 percent in October.
