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Global Business Cycle Indicators


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Benchmark Revisions - January 2008

Press Release Archive

Released: Thursday, January 24, 2008

This release incorporates benchmark revisions into the composite indexes for Australia.

The compositions of both the coincident and leading indexes for Australia have been revised. The unemployment rate will no longer be used as a component of the CEI, and the medium-term government bond yield will be omitted as a component of the LEI.

This release also incorporates two major methodological revisions to the composite index of leading economic indicators (LEI): 1) a new method for calculating the contribution of the yield spread in the LEI and 2) a trend adjustment to the LEI. The new measure of the yield spread improves the performance of the LEI by better reflecting the way the yield spread anticipates cyclical economic turning points. The trend adjustment facilitates interpretation and use of the LEI.

The benchmark revisions also bring the composite indexes up-to-date with data revisions in the components and update the standardization factors used in their calculation. This is a maintenance procedure typically done once a year, which usually does not change the cyclical properties of the indexes and has, as expected, very small effects.

These changes are the result of research at The Conference Board (TCB) and regular consultations with its Business Cycle Indicators Advisory Panel and other experts. The Conference Board continuously monitors the behavior and performance of the composite indexes and their components and makes changes from time to time. This revision is consistent with long-standing Conference Board policy to make changes to the indexes when research indicates substantial improvements are possible. Because of these revisions, the composite indexes and their monthly changes are no longer directly comparable with previous releases. Similar methodological changes were introduced into the US LEI last year and will be incorporated into the LEIs of other countries covered by The Conference Board global indicators program. Please see page 3 for further details. For more information please visit our web site here at

The Conference Board announced today that the leading index for Australia increased 0.8 percent and the coincident index increased 0.3 percent in November.

  • The leading index increased again in November, the fourth consecutive monthly increase in the index. Money supply and building approvals were the largest positive contributors to the leading index while share prices was the largest negative contributor; the yield spread also contributed negatively to the leading index in November. The six-month growth rate of the leading index picked up to 2.9 percent (a 5.8 percent annual rate) from May to November, above the average growth rate of about 0.9 percent that prevailed in the third quarter. However, the strengths among the leading indicators have only been slightly more widespread than the weaknesses in recent months.
  • The coincident index increased again in November. Employed persons made the largest positive contribution to the index this month, while industrial production continued to be the lone negative contributor. The coincident index grew by 1.5 percent (a 3.1 percent annual rate) from May to November, slightly slower than the average six-month growth rate of 1.8 percent in the third quarter.
  • The leading index has continued to increase, and its growth rate has picked up somewhat in the first two months of the fourth quarter, although the strengths among its components have remained only slightly more widespread than the weaknesses. Meanwhile, real GDP has grown at an average annual rate of 4.1 percent in the first half of 2007 and it maintained this growth rate through the third quarter of 2007. The current behavior of the composite indexes suggests that moderately strong economic growth will likely continue in the near term.

LEADING INDICATORS. Five of the seven components in the leading index increased in November. The positive contributors to the index — in order from the largest positive contributor to the smallest — are money supply*, building approvals*, rural goods exports*, gross operating surplus* and the sales to inventories ratio. Share prices and yield spread" declined.

With the 0.8 percent increase in November, the leading index now stands at 186.3 (1990=100). Based on revised data, this index increased 1.1 percent in October and increased 0.6 percent in September. During the six-month period through November, the leading index increased 2.9 percent, and four of the eight components increased (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. Three of the five components in the coincident index increased in November. The increases — in order from the largest positive contributor to the smallest — occurred in employed persons, household gross disposable income*, and retail trade. Industrial production* declined in November.

With the increase of 0.3 percent in November, the coincident index now stands at 144.6 (1990=100). Based on revised data, this index increased 0.1 percent in October and increased 0.1 percent in September. During the six-month period through November, the coincident index increased 1.5 percent, with three of the four components in the series making positive contributions (diffusion index, six-month span equals 75.0 percent).

DATA AVAILABILITY. The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on January 23, 2008. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates are sales to inventory ratio and gross operating surplus for private non-financial corporations, the implicit price index used to deflate rural goods exports and building approvals, and the CPI used to deflate money supply M3. Series in the coincident index that are based on The Conference Board estimates are industrial production and household disposable income. CPI was used to deflate retail trade.