The coincident index increased again in January. From July to January, this index of current economic activity grew 0.9 percent (a 1.8 percent annual rate) and it is 1.8 percent above its January 2006 level. In addition, the strengths among the coincident indicators have been widespread in recent months.
The leading index is still slightly below its most recent high in January 2006 and it has been flat to declining in seven of the last twelve months, but its six-month growth rate has picked up in the last two months. At the same time, real GDP growth picked up to a 3.5 percent annual rate in the fourth quarter of 2006 according to advance estimates, following a 2.0 percent rate in the third quarter of 2006. 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. Four of the ten indicators that make up the leading index increased in January. The positive contributors — beginning with the largest positive contributor — were real money supply*, index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), and stock prices. The negative contributors — beginning with the largest negative contributor — were average weekly manufacturing hours, building permits, manufacturers' new orders for nondefense capital goods*, interest rate spread, vendor performance, and manufacturers' new orders for consumer goods and materials*.
The leading index now stands at 138.5 (1996=100). Based on revised data, this index increased 0.6 percent in December and decreased 0.1 percent in November. During the six-month span through January, the leading index increased 0.7 percent, with five out of ten components advancing (diffusion index, six-month span equals fifty percent).
COINCIDENT INDICATORS. Three of the four indicators that make up the coincident index increased in January. The positive contributors to the index — beginning with the largest positive contributor — were personal income less transfer payments*, employees on nonagricultural payrolls, and manufacturing and trade sales*. The negative contributor was industrial production.
The coincident index now stands at 123.3 (1996=100). This index increased 0.2 percent in December and increased 0.1 percent in November. During the six-month period through January, the coincident index increased 0.9 percent.
LAGGING INDICATORS. The lagging index stands at 127.6 (1996=100) in January, with one of the seven components advancing. The positive contributor to the index was ratio of consumer installment credit to personal income*. The negative contributors — beginning with the largest negative contributor — were commercial and industrial loans outstanding* and average duration of unemployment (inverted). The ratio of manufacturing and trade inventories to sales*,change in labor cost per unit of output*, average prime rate charged by banks, and change in CPI for services* held steady in January. Based on revised data, the lagging index increased 0.8 percent in December and increased 0.6 percent in November.
