The coincident index increased again in November. This measure of current economic activity has been growing steadily, although its growth moderated somewhat in recent months. From May to November, the coincident index grew at a 1.1 percent rate (a 2.1 percent annual rate). In addition, the strengths among the coincident indicators have been very widespread in recent months. At the same time, real GDP growth slowed to a 2.2 percent (annual) rate in the third quarter, following a 5.6 percent gain in the first quarter and a 2.6 percent gain in the second quarter.
The leading index was fluctuating around a slightly downward short-term trend since January, and, despite three consecutive gains, it is still 0.6 percent below its most recent high reached at the beginning of the year. The decline in the growth rate of the leading index since the beginning of the year appears to have moderated in recent months, but the strength among the leading indicators has not been widespread. The recent behavior of the leading index so far still suggests that slow economic growth is likely to continue in the near term.
LEADING INDICATORS. Four of the ten indicators that make up the leading index increased in November. The positive contributors — beginning with the largest positive contributor — were real money supply*, vendor performance, manufacturers' new orders for nondefense capital goods* and stock prices. The negative contributors — beginning with the largest negative contributor — were average weekly initial claims for unemployment insurance (inverted), building permits, interest rate spread, average weekly manufacturing hours and index of consumer expectations. The manufacturers' new orders for consumer goods and materials* held steady in November.
The leading index now stands at 138.2 (1996=100). Based on revised data, this index increased 0.1 percent in October and increased 0.4 percent in September. During the six-month span through November, the leading index increased 0.2 percent, with six out of ten components advancing (diffusion index, six-month span equals fifty percent).
COINCIDENT INDICATORS. All four indicators that make up the coincident index increased in November. The positive contributors to the index — beginning with the largest positive contributor — were employees on nonagricultural payrolls, industrial production, manufacturing and trade sales* and personal income less transfer payments*.
The coincident index now stands at 124.0 (1996=100). This index increased 0.2 percent in October and increased 0.1 percent in September. During the six-month period through November, the coincident index increased 1.1 percent.
LAGGING INDICATORS. The lagging index stands at 124.9 (1996=100) in November, 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*, change in labor cost per unit of output*, average duration of unemployment (inverted), ratio of manufacturing and trade inventories to sales* and ratio of consumer installment credit to personal income*. The only negative contributor was the change in CPI for services. The average prime rate charged by banks* held steady in November. Based on revised data, the lagging index increased 0.2 percent in October and increased 0.2 percent in September.
