The Conference Board Leading Economic Index⢠(lei) For The United ...
FOR RELEASE: 10:00 A.M. ET, Thursday, August 20, 2009
The Conference Board®
U.S. Business Cycle IndicatorsSM
THE CONFERENCE BOARD LEADING ECONOMIC INDEX™
(LEI) FOR THE UNITED STATES
AND RELATED COMPOSITE ECONOMIC INDEXES FOR JULY 2009
The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 0.6
percent, The Conference Board Coincident Economic Index™ (CEI) remained unchanged and
The Conference Board Lagging Economic Index™ (LAG) decreased 0.3 percent in July.
• The Conference Board LEI for the U.S. rose again in July, its fourth consecutive increase. The
six-month change in the index has risen to 3.0 percent (a 6.2 percent annual rate) in the period
through July, up substantially from -2.8 percent (a -5.4 percent annual rate) for the previous
six months, and the strengths among the leading indicators have grown more widespread in
recent months. The interest rate spread, initial unemployment claims and the average
workweek made large positive contributions to the index this month, more than offsetting the
negative contributions from consumer expectations, real money supply, and building permits.
• The Conference Board CEI for the U.S. was unchanged in July, after decreasing for the past
consecutive eight months. Index levels were revised slightly lower in recent months as a result
of downward revisions to personal income. Between January and July 2009, the index fell 2.7
percent (a -5.4 percent annual rate), slower than the decline of 3.5 percent (a -6.8 percent
annual rate) for the previous six months. In July, the lagging economic index for the U.S. fell
again, and with the coincident economic index remaining unchanged, the coincident-to-
lagging ratio increased further. Meanwhile, real GDP fell at a 1.0 percent annual rate in the
second quarter, following a contraction of 6.4 percent annual rate for the first quarter of the
year.
• After having fallen steadily since reaching a peak in July 2007, The Conference Board LEI for
the U.S. has increased sharply in the last four months, amid widespread strength among its
components. As a result, the six-month growth rate in the index has accelerated to its highest
rate since the middle of 2004. Meanwhile, the decline in The Conference Board CEI for the
U.S. has gradually moderated in recent months. All in all, the behavior of the composite
indexes suggests that the recession is bottoming out and that economic activity will likely
begin to recover soon.
LEADING INDICATORS. Six of the ten indicators that make up The Conference Board
LEI for the U.S. increased in July. The positive contributors – beginning with the largest positive
contributor – were interest rate spread, average weekly initial claims for unemployment insurance
(inverted), average weekly manufacturing hours, index of supplier deliveries (vendor
performance), stock prices, and manufacturers’ new orders for nondefense capital goods*. The
negative contributors – beginning with the largest negative contributor – were index of consumer
expectations, real money supply*, and building permits. The manufacturers’ new orders for
consumer goods and materials* held steady in July.
The next release is scheduled for September 21, Monday at 10 A.M. ET.
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The Conference Board LEI for the U.S. now stands at 101.6 (2004=100). Based on revised data,
this index increased 0.8 percent in June and increased 1.2 percent in May. During the six-month span
through July, the leading economic index increased 3.0 percent, with eight out of ten components
advancing (diffusion index, six-month span equals 85 percent).
COINCIDENT INDICATORS. Three of the four indicators that make up The Conference Board
CEI for the U.S. increased in July. The positive contributors to the index – beginning with the largest
positive contributor – were industrial production, personal income less transfer payments* and
manufacturing and trade sales*. The negative contributor was employees on nonagricultural payrolls.
The Conference Board CEI for the U.S. now stands at 99.7 (2004=100). This index decreased
0.4 percent in June and decreased 0.4 percent in May. During the six-month period through July, the
coincident economic index decreased 2.7 percent, with none of the four components advancing
(diffusion index, six-month span equals 0.0 percent).
LAGGING INDICATORS. The Conference Board LAG for the U.S. stands at 110.8
(2004=100) in July, with one of the seven components advancing. The positive contributor to the
index was the ratio of consumer installment credit to personal income*. The negative contributors –
beginning with the largest negative contributor – were commercial and industrial loans outstanding*,
average duration of unemployment (inverted), change in labor cost per unit of output*, change in CPI
for services and the ratio of manufacturing and trade inventories to sales*. The average prime rate
charged by banks held steady in July. Based on revised data, the lagging economic index decreased
0.7 percent in June and decreased 0.6 percent in May.
DATA AVAILABILITY AND NOTES.
The data series used to compute The Conference Board Leading Economic Index™ (LEI) for the U.S., The
Conference Board Coincident Economic Index™ (CEI) for the U.S. and The Conference Board Lagging Economic
Index™ (LAG) for the U.S. and reported in the tables in this release are those available “as of” 12 Noon on August 19,
2009. Some series are estimated as noted below.
* Series in The Conference Board LEI for the U.S. based on our estimates are manufacturers’ new orders for
consumer goods and materials, manufacturers’ new orders for nondefense capital goods, and the personal consumption
expenditure used to deflate the money supply. Series in The Conference Board CEI for the U.S. that are based on our
estimates are personal income less transfer payments and manufacturing and trade sales. Series in The Conference Board
LAG for the U.S. that are based on our estimates are inventories to sales ratio, consumer installment credit to income ratio,
change in labor cost per unit of output, and the personal consumption expenditure used to deflate commercial and industrial
loans outstanding.
The procedure used to estimate the current month’s personal consumption expenditure deflator (used in the
calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month’s
consumer price index when it is available before the release of The Conference Board LEI for the U.S.
# # #
Professional Contacts at The Conference Board:
Media Contacts:
Ken Goldstein:
212-339-0331
Frank Tortorici:
212-339-0231
Indicators Program:
212-339-0330
Carol Courter:
212-339-0232
Email:
indicators@conference-board.org
Website:
www.conference-board.org/economics/bci
THE CYCLICAL INDICATOR APPROACH. The composite economic indexes are the key elements in an
analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging
economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators.
(See page 3 for details.) They are constructed to summarize and reveal common turning point patterns in economic
data in a clearer and more convincing manner than any individual component—primarily because they smooth out
some of the volatility of individual components.
Historically, the cyclical turning points in The Conference Board LEI for the U.S. have occurred before those in
aggregate economic activity, while the cyclical turning points in The Conference Board CEI for the U.S. have
occurred at about the same time as those in aggregate economic activity. The cyclical turning points in The
Conference Board LAG for the U.S generally have occurred after those in aggregate economic activity.
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U.S. Composite Economic Indexes: Components and Standardization Factors
Leading Economic Index
Factor
1 Average weekly hours, manufacturing
0.2549
2 Average weekly initial claims for unemployment insurance
0.0307
3 Manufacturers' new orders, consumer goods and materials
0.0774
4 Index of supplier deliveries – vendor performance
0.0677
5 Manufacturers' new orders, nondefense capital goods
0.0180
6 Building permits, new private housing units
0.0270
7 Stock prices, 500 common stocks
0.0390
8 Money supply, M2
0.3580
9 Interest rate spread, 10-year Treasury bonds less federal funds
0.0991
10 Index of consumer expectations
0.0282
Coincident Economic Index
1 Employees on nonagricultural payrolls
0.5439
2 Personal income less transfer payments
0.1873
3 Industrial
production
0.1497
4 Manufacturing and trade sales
0.1191
Lagging Economic Index
1 Average duration of unemployment
0.0371
2 Inventories to sales ratio, manufacturing and trade
0.1238
3 Labor cost per unit of output, manufacturing
0.0608
4 Average prime rate
0.2825
5 Commercial and industrial loans
0.1127
6 Consumer installment credit to personal income ratio
0.1872
7 Consumer price index for services
0.1959
Notes:
The component factors are inversely related to the standard deviation of the month-to-month changes in each
component. They are used to equalize the volatility of the contribution from each component and are “normalized”
to sum to 1. When one or more components are missing, the other factors are adjusted proportionately to ensure
that the total continues to sum to 1.
These factors were revised effective on the release for January 2009, and all historical values for the three
composite economic indexes were revised at this time to reflect the changes. (Under normal circumstances,
updates to the leading, coincident, and lagging economic indexes only incorporate revisions to data over the past
six months.) The factors for The Conference Board LEI for the U.S. were calculated using 1984-2007 as the
sample period for measuring volatility. A separate set of factors for the 1959-1983 period is available upon
request. The primary sample period for the coincident and lagging economic indexes was 1959-2007. For
additional information on the standardization factors and the index methodology see: “Benchmark Revisions in the
Composite Indexes,” Business Cycle Indicators December 1997 and “Technical Appendix: Calculating the
Composite Indexes” Business Cycle Indicators December 1996, or the Web site: www.conference-
board.org/economics/bci.
The trend adjustment factor for The Conference Board LEI for the U.S is -0.0101, and the trend adjustment factor for
The Conference Board LAG for the U.S is 0.1615.
To address the problem of lags in available data, those leading, coincident and lagging indicators that are not
available at the time of publication are estimated using statistical imputation. An autoregressive model is used to
estimate each unavailable component. The resulting indexes are therefore constructed using real and estimated
data, and will be revised as the unavailable data during the time of publication become available. Such revisions
are part of the monthly data revisions, now a regular part of the U.S. Business Cycle Indicators program. The main
advantage of this procedure is to utilize in the leading economic index data such as stock prices, interest rate
spread, and manufacturing hours that are available sooner than other data on real aspects of the economy such as
manufacturers’ new orders. Empirical research by The Conference Board suggests that there are real gains in
adopting this procedure to make all the indicator series as up-to-date as possible.
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The Conference Board Leading Economic Index™ (LEI) for the U.S. news release schedule for 2009:
Monday, September 21, 2009
for August 2009 data
Thursday, October 22, 2009
for September 2009 data
Thursday, November 19, 2009
for October 2009 data
Thursday, December 17, 2009
for November 2009 data
All releases are at 10:00 AM ET.
About The Conference Board
The Conference Board is a global, independent business-membership and research
association working in the public interest. Our mission is unique: To provide the
world’s leading organizations with the practical knowledge they need to improve their
performance AND better serve society. The Conference Board is a non-advocacy, not-
for-profit entity holding 501 (c) (3) tax-exempt status in the United States.
AVAILABLE FROM THE CONFERENCE BOARD
U.S. Business Cycle Indicators Internet Subscription
$ 635 per year (1 user)
(Includes monthly release, data, charts and commentary)
Individual Data Series
$ 35 per series downloaded
Monthly BCI Report
$ 275 per year
(Sample available at http://www.conference-board.org/publications/describeBCI.cfm)
BCI Handbook (published 2001)
$ 20
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contact Indicators Program at (212) 339-0330
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Conference Board and accredited academic institutions.
THESE DATA ARE FOR NEWS ANALYSIS PURPOSES ONLY. NOT FOR
REDISTRIBUTION, PUBLISHING, DATABASING OR PUBLIC POSTING WITHOUT
EXPRESS WRITTEN PERMISSION.
Table 1.--Summary of U.S. Composite Economic Indexes
2009
Jan
Feb
Mar
Apr
May
Jun
Jul
Leading index
98.6
98.2
97.9
99.0 r
100.2
101.0
r
101.6 p
Percent change
-.3
-.4
-.3
1.1 r
1.2 r
.8
r
.6 p
Diffusion index
30.0
50.0
30.0
70.0
70.0
70.0
70.0
Coincident index
102.5
101.8 r
101.0 r
100.5 r
100.1 r
99.7 p
99.7 p
Percent change
-.9
-.7 r
-.8
-.5 r
-.4 r
-.4 p
.0 p
Diffusion index
0.0
25.0
0.0
0.0
0.0
25.0
75.0
Lagging index
114.5
113.9 r
113.3 r
112.6 r
111.9 r
111.1 p
110.8 p
Percent change
.3
-.5 r
-.5 r
-.6 r
-.6 r
-.7 p
-.3 p
Diffusion index
28.6
28.6
28.6
14.3
7.1
21.4
14.3
Coincident-lagging
89.5
89.4 r
89.1 r
89.3 r
89.5 r
89.7 p
90.0 p
ratio
Jul to
Aug to
Sep to
Oct to
Nov to
Dec to
Jan to
Jan
Feb
Mar
Apr
May
Jun
Jul
Leading index
Percent change
-2.8
-2.4
-2.7
-.6
1.2
2.1
3.0
Diffusion index
30.0
20.0
20.0
30.0
50.0
60.0
85.0
Coincident index
Percent change
-3.5
-3.8
-3.4
-4.1
-3.8
-3.6
-2.7
Diffusion index
.0
.0
.0
.0
.0
.0
.0
Lagging index
Percent change
1.8
.8
-.2
-.9
-2.1
-2.7
-3.2
Diffusion index
57.1
57.1
28.6
28.6
14.3
14.3
7.1
p Preliminary. r Revised (noted only for index levels and one-month percent changes). c Corrected.
CALCULATION NOTE: The diffusion indexes measure the proportion of the components that are rising. Components
that rise more than 0.05 percent are given a value of 1.0, components that change less than 0.05 percent are given
a value of 0.5, and components that fall more than 0.05 percent are given a value of 0.0.
The full history of composite and diffusion indexes is available by subscription on our web site at
www.conference-board.org/economics/bci
THESE DATA ARE FOR NEWS ANALYSIS PURPOSES ONLY. NOT FOR
REDISTRIBUTION, PUBLISHING, DATABASING OR PUBLIC POSTING WITHOUT
EXPRESS WRITTEN PERMISSION.
Table 2.--Data and Ne t Contr ibutions for Com pone nts of the U.S. Le ading Econom ic Inde x
2009
Component
Jan
Feb
Mar
A pr
May
Jun
Jul
U.S. Leading Economic Index c omponent data
A verage w orkw eek, production
w orkers , mf g. (hours )............................
39.8
39.5
39.4
39.6
39.4
39.5
39.8
A verage w eekly initial claims, s tate
unemploy ment ins urance (thousands)*. 580.9
636.8
658.0
624.4
632.5
616.1
556.5
Manuf acturers ' new orders, consumer
goods and materials (mil. 1982 dol.).......
117,079
117,120
114,753
116,179
114,036 r 114,118 r 114,182 **
Index of s upplier deliveries --
v endor perf ormance (percent)..............
45.3
46.7
43.6
44.9
49.8
50.6
52.0
Manuf acturers ' new orders, nondef ens e
c apital goods (mil. 1982 dol.)..................
30,959
32,419
32,117
31,006
33,886 r
32,938 r
33,278 **
Building permits (thous .)........................... 531
550
511
498
518
570 r
560
Stock pric es, 500 common stoc ks (c)
(index: 1941-43=10)............................... 865.58
805.23
757.13
848.15
902.41
926.12
935.82
Money supply , M2 (bil. chn. 2005 dol.)..... 7,606.7 r
7,609.8 r
7,683.1 r
7,628.4 r
7,682.3 r
7,663.6 r
7,640.3 **
Interest rate s pread, 10-year Treas ury
bonds less f ederal f unds ....................... 2.37
2.65
2.64
2.78
3.11
3.51
3.40
Index of c onsumer expectations (c )
(1966:1=100).......................................... 57.8
50.5
53.5
63.1
69.4
69.2
63.2
LEA DING INDEX (2004=100).................... 98.6
98.2
97.9
99.0 r
100.2
101.0 r
101.6 p
Perc ent c hange f rom prec eding month..
-0.3
-0.4
-0.3
1.1 r
1.2 r
0.8 r
0.6 p
U.S. Leading Economic Index net c ontributions
A verage w orkw eek, production
w orkers , mf g.......................................... ....
-.19
-.06
.13
-.13
.06
.19
A verage w eekly initial claims, s tate
unemploy ment ins urance.......................
....
-.28
-.10
.16
-.04
.08
.31
Manuf acturers ' new orders, consumer
goods and materials...............................
....
.00
-.16
.10
-.14 r
.01 r
.00 **
Index of s upplier deliveries --
(vendor perf ormance)........................... ....
.09
-.21
.09
.33
.05
.09
Manuf acturers ' new orders, nondef ens e
c apital goods ..........................................
....
.08
-.02
-.06
.16 r
-.05 r
.02 **
Building permits........................................
....
.09
-.20
-.07
.11
.26 r
-.05
Stock pric es, 500 common stoc ks (c)
....
-.28
-.24
.44
.24
.10
.04
Money supply , M2.................................... ....
.01 r
.34 r
-.26
.25
-.09 r
-.11 **
Interest rate s pread, 10-year Treas ury
bonds less f ederal f unds ....................... ....
.26
.26
.28
.31
.35
.34
Index of c onsumer expectations (c )
....
-.21
.08
.27
.18
-.01
-.17
p Preliminary. r Revised. c Corrected.
* Inv erted series; a negative c hange in this component makes a positive contribution to the index .
** Statistical Imputation (See page 3 f or more details )
(c) Copyrighted. Series f rom private sources are provided through the courtesy of the compilers and
are subject to their c opy rights: Stoc k prices, Standard & Poor's Corporation; Index of cons umer ex pec tations,
Univers ity of Michigan's Survey Res earc h Center.
CA LCULA TION NOTE--The percent change in the index does not alw ays equal the sum of the net c ontributions
of the indiv idual components (because of rounding ef f ec ts and base value dif f erences).
© The Confe r e nce Boar d
The s e data ar e pr ote cte d by copyr ight and ar e for ne w s analys is pur pos e s only.
The data and analys is ar e not for databas ing by any m e ans , r e dis tr ibution,
publis hing, or public pos ting w ithout e xpr e s s w r itte n pe r m is s ion fr om The Confe r e nce Boar d.
THESE DATA ARE FOR NEWS ANALYSIS PURPOSES ONLY. NOT FOR
REDISTRIBUTION, PUBLISHING, DATABASING OR PUBLIC POSTING WITHOUT
EXPRESS WRITTEN PERMISSION.
T able 3 .--D ata and N et C o ntributio ns fo r C o mpo nents o f the U.S. C o incident Eco no mic Index and the U.S. Lagging Eco no mic Index
2009
Component
Jan
Feb
Mar
Apr
May
Jun
Jul
U.S. Coincident Economic Index component data
Employees on nonagricultural payrolls
(thousands).................................................... 134,333
133,652
133,000
132,481
132,178 r 131,735 r 131,488
Personal income less transfer payments
(ann. rate, bil. chn. 2005 dol.).......................... 9,348.7 r 9,214.8 r 9,139.5 r 9,092.3 r
9,077.2 r 9,002.2 r
9,007.1 **
Industrial production (index: 2002=100)............. 100.115
99.340 r
97.705 r
96.976 r
95.861 r
95.457 r
95.971
Manufacturing and trade sales
(mil. chn. 2005 dol.).......................................... 940,862 r 942,461 r 932,447 r 926,964 r 919,677 r 921,666 ** 922,505 **
COINCIDENT INDEX (2004=100).........................
102.5
101.8 r
101.0 r
100.5 r
100.1 r
99.7 p
99.7 p
Percent change from preceding month............
-0.9
-0.7 r
-0.8
-0.5 r
-0.4 r
-0.4 p
0.0 p
U.S. Coincident Economic Index net contributions
Employees on nonagricultural payrolls............... ....
-.28
-.27
-.21
-.12 r
-.18
-.10
Personal income less transfer payments........... ....
-.27 r
-.15 r
-.10 r
-.03 r
-.16 r
.01 **
Industrial production........................................... ....
-.12 r
-.25 r
-.11 r
-.17
-.06
.08
Manufacturing and trade sales.......................... ....
.02 r
-.13 r
-.07 r
-.09 r
.03 **
.01 **
U.S. Lagging Economic Index component data
Average duration of unemployment
(w eeks)*.........................................................
19.8
19.8
20.1
21.4
22.5
24.5
25.1
Ratio, manufacturing and trade inventories
to sales (chain 2005 dol.).................................
1.471
1.457 r
1.463 r
1.462 r
1.461 r
1.460 **
1.459 **
Change in index of labor cost per unit of
output, mfg. (6-month percent, ann. rate)........
15.1 r
11.7 r
6.2 r
6.20 r
2.1 r
-1.1 r
-1.8 **
Average prime rate charged by banks
(percent)..........................................................
3.25
3.25
3.25
3.25
3.25
3.25
3.25
Commercial and industrial loans
outstanding (mil. chn. 2005 dol.)...................... 921,356 r 893,271 r 865,414 r 836,702 r 832,080 r 796,128 r 777,813 **
Ratio, consumer installment credit out-
standing to personal income (percent)............
21.20 r
21.29 r
21.25 r
21.09 r
20.78 r
20.97 r
20.98 **
Change in CPI for services
(6-month percent, ann. rate)............................
1.0
.8
.8
.7
.6
.5
.3
LAGGING INDEX (2004=100).............................
114.5
113.9 r
113.3 r
112.6 r
111.9 r
111.1 p
110.8 p
Percent change from preceding month............
.3
-.5 r
-.5 r
-.6 r
-.6 r
-.7 p
-.3 p
U.S. Lagging Economic Index net contributions
Average duration of unemployment................... ....
.00
-.06
-.23
-.19
-.32
-.09
Ratio, manufacturing and trade inventories
to sales.......................................................... ....
-.12 r
.05 r
-.01 r
-.01 r
-.01 **
-.01 **
Change in index of labor cost per unit of
output, mfg...................................................... ....
-.21 r
-.33
.00 r
-.25 r
-.19
-.04 **
Average prime rate charged by banks.............. ....
.00
.00
.00
.00
.00
.00
Commercial and industrial loans
outstanding....................................................... ....
-.35
-.36 r
-.38
-.06
-.50
-.26 **
Ratio, consumer installment credit out-
standing to personal income............................ ....
.08 r
-.04 r
-.14 r
-.28
.17 r
.01 **
Change in CPI for services................................. ....
-.04
.00
-.02
-.02
-.02
-.04
CPI Consumer Price Index. For additional notes see table 2.
* Inverted series; a negative change in this component makes a positive contribution to the index.
** Statistical Imputation (See page 3 for more details)
© The Conference Board
These data are protected by copyright and are for new s analysis purposes only.
The data and analysis are not for databasing by any means, redistribution,
publishing, or public posting w ithout express w ritten permission from The Conference Board.
THESE DATA ARE FOR NEWS ANALYSIS PURPOSES ONLY. NOT FOR
REDISTRIBUTION, PUBLISHING, DATABASING OR PUBLIC POSTING WITHOUT
EXPRESS WRITTEN PERMISSION.
U.S. Composite Economic Indexes (2004=100)
Peak:
60:4
69:12 73:11
80:1 81:7
90:7
01:3
07:12
Trough:
61:2
70:11 75:3
80:7 82:11
91:3
01:11
120
The Conference Board LEI for the U.S.
100
80
60
40
Ju l -0 9
20
60
65
70
75
80
85
90
95
00
05
10
Peak:
60:4
69:12 73:11
80:1 81:7
90:7
01:3
07:12
Trough:
61:2
70:11 75:3
80:7 82:11
91:3
01:11
120
The Conference Board CEI for the U.S.
100
80
60
40
Ju l -0 9
60
65
70
75
80
85
90
95
00
05
10
Peak:
60:4
69:12 73:11
80:1 81:7
90:7
01:3
07:12
Trough:
61:2
70:11 75:3
80:7 82:11
91:3
01:11
120
The Conference Board LAG for the U.S.
100
80
60
40
Ju l -0 9
60
65
70
75
80
85
90
95
00
05
10
Shaded areas represent recessions.
Source:
The
Conference
Board
