Housing permits and interest rate spread continued to make negative contributions through August. At the same time, real GDP grew at a 2.3 percent average annual rate in the first half of the year (including a 0.6 percent rate in the first quarter and a 4.0 percent rate in the second quarter). The current behavior of the leading index suggests that economic growth is likely to continue in the near term, albeit at a slow pace.
LEADING INDICATORS. One of the ten indicators that make up the leading index increased in August. The positive contributor was real money supply.
The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), stock prices, building permits, vendor performance, manufacturers' new orders for nondefense capital goods, interest rate spread, and manufacturers' new orders for consumer goods and materials. The average weekly manufacturing hours held steady in August.
The leading index now stands at 137.8 (1996=100). Based on revised data, this index increased 0.7 percent in July and decreased 0.1 percent in June. During the six-month span through August, the leading index increased 0.5 percent, with six out of ten components advancing (diffusion index, six-month span equals 60 percent).
COINCIDENT INDICATORS. Three of the four indicators that make up the coincident index increased in August. 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. Employees on nonagricultural payrolls was essentially unchanged in August.
The coincident index now stands at 124.6 (1996=100). This index increased 0.2 percent in July and increased 0.1 percent in June. During the six-month period through August, the coincident index increased 0.9 percent.
LAGGING INDICATORS. The lagging index stands at 129.4 (1996=100) in August, with three 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), and ratio of consumer installment credit to personal income.
The negative contributors were change in CPI for services and change in labor cost per unit of output. The ratio of manufacturing and trade inventories to sales and average prime rate charged by banks held steady in August. Based on revised data, the lagging index increased 0.2 percent in July and increased 0.5 percent in June.
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