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UNITED STATES DEPARTMENT OF BUREAU OF ECONOMIC ANALYSIS WASHINGTON, D.C. 20230 FOR WIRE TRANSMISSION 8:30 A.M. EST, TUESDAY, MARCH 29, 1988 Larry Moran: Recorded Message: (202) 523-0777 (202) 898-2450 BEA 88-12 COMPOSITE INDEXES OF LEADING, COINCIDENT, AND LAGGING INDICATORS: FEBRUARY 1988 The composite index of leading indicators increased 0.9 percent in February to 190.6 (1967=100), according to preliminary estimates released today by the Commerce Department's Bureau of Economic Analysis. On the basis of more complete data, the index decreased 1.1 percent in January and increased 0.4 percent in December. A month ago, the bureau reported estimates that showed the index decreased 0.6 percent in January and increased 0.3 percent in December. Change in credit outstanding was the major contributor to the January revision. Change in inventories on hand and on order in 1982 dollars was the major contributor to the December revision. Five of 9 indicators available for February contributed to the increase in the index. They were, ordered from the largest positive contributor to the smallest: building permits, average weekly initial claims for state unemployment insurance, stock prices, money supply in 1982 dollars, and manufacturers ' new orders for consumer goods and materials in 1982 dollars. Four of 9 indicators made negative contributions. They were, ordered from the largest negative contributor to the smallest: average workweek, contracts and orders for plant and equipment in 1982 dollars, change in sensitive materials prices, and vendor performance (i.e., companies receiving slower deliveries from ve n d o r s ) . The composite index of coincident indicators, a monthly approximation of aggregate economic activity, increased 0.9 percent in February to 174.7 (1967=100). On the basis of more complete data, the index decreased 0.1 percent in January and increased 0.8 percent in December. f The composite index of lagging indicators increased 0.1 percent in February to 142.6 (1967=100). On the basis of more complete data, the index decreased 0.3 percent in January and increased 0.1 percent in December. more - 2 - The leading index is designed to predict monthly movements in aggregate economic activity, which is approximated by the coincident index. The lagging index is expected to move, after a time lag, in the same direction as the coincident index and thus to confirm the movements in the coincident index. These concepts are explained more fully in the 1984 edition of Handbook of Cyclical Indicators (price $5.50, stock number 003-010-00127-5), which is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. More data on the composite indexes, as well as other important measures of economic activity, appear each month in Business Conditions D i g e s t , also available from the Superintendent of Documents. Annual subscription: $44.00. This and other news releases are available electronically at the time of public release through the Commerce Department's Economic Bulletin Board at a nominal charge to users. For information, call (202) 377-1986. Next release d a t e : April 29 for the March composite indexes. k k k Four telephone lines carry short recorded messages providing BEA estimates immediately upon their release: (202) 898-2450 2451 2452 2453 Leading indicators Gross national product Personal income and outlays The most recently released of the following series: Merchandise trade, balance of payments basis, or Summary of international transactions, or Plant and equipment expenditures. COMPOSITE INDEXES (Nov.) P (Mar.) T (Jan.) (July) P T (July) P (Nov.) T the end of general business recession and the beginning of expansion. Thus, the shaded areas represent recessions. The arrows indicate the length of leads (-) and lags (+), in months, from the business cycle turning dates. Table Year 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 Jan . 147.7 141.4 142.1 135.1 145.2 164.6 165.5 174.1 185.5 188.9r Feb. 147.5 140.4 140.4 135.7 147.4 166.7 166.5 175.0 186.0 190.6p Mar. 149.3 137.4 141.7 134.7 150.2 166.7 167.2 176.4 1 8 7 .6r 1. Composite Apr . 146.4 133.4 144.6 136.0 152.5 167.6 165.9 178.1 188.Or May 147.6 130.9 144.5 136.2 154.4 167.9 166.9 178.5 188.9r Indexes of Leading, July June 146.5 132.0 143.2 135.5 157.3 166.6 167.3 178.3 190.7r Coincident, Sept Aug. Oct. L ea d i nç index (1967= 100) 145.2 135.1 142.9 136.2 158.2 163.8 168.5 179.9 191.4 144.5 141.2 139.3 137.5 160.0 164.1 170.2 179.9 192.8r 144.5 138.3 142.4 136.1 158.9 163.4 169.3 180.3 192.4r an d 141.7 142.4 136.9 138.6 162.4 163.6 171.2 181.2 192.7r Lagging Indicators Nov. Dec. 140.1 143.4 137.0 139.4 162.5 164.4 171.1 182.7 190.3r 140.5 143.0 136.2 140.9 163.4 163.8 174.0 186.7 19 1 .Or IQ 11Q 11 IQ 144.7 138.2 141.5 136.6 159.0 163.8 169.3 180.0 192.2r IVQ 140.8 142.9 136.7 139.6 162.8 163.9 172.1 183.5 191.3r 148.2 139.7 141.4 135.2 147.6 166.0 166.4 175.2 186.4 146.8 132.1 144.1 135.9 154.7 167.4 166.7 178.3 189.2r .4 -.8 -1.0 -1.1 5.7 2.0 1.5 1.8 1.6 - .9 -5.4 1.9 .5 4.8 .8 .2 1.8 1 .5r -1.4 4.6 -1.8 .5 2.8 -2.2 1.6 1.0 1.6 -2.7 3.4 -3.4 2.2 2.4 .1 1.7 1.9 - .5r 150.0 149.5 147.1 139.2 134.1 150.4 158.9 163.1 167.3r 150.1 142.9 147.2 138.0 137.8 154.0 160.1 164.5 167.9r 150.7 141.6 147.1 135.4 141.6 156.1 160.5 165.0 169.8r 150.1 145.2 142.8 132.7 146.1 157.7 161.8 166.2 172.6r .1 -4.4 .1 - .9 2.8 2.4 .8 .9 .4 .4 - .9 - .1 -1.9 2.8 1 .4 .2 .3 1 .1 -.4 2.5 -2.9 -2.0 3.2 1.0 .8 .7 1.6 123.3 120.6 123.5 124.4 114.2 127.4 136.0 141.9 14 1 .3r 126.1 120.7 124.6 120.6 115.1 130.1 138.8 143.2 142.5r 1.3 -6 . 6 1 .9 -1 .6 - .3 3.7 1.2 2.3 .1 .9 - 3. 1 .8 2.1 2.1 .9 .8 r Leading index --per cent change from pre ceding month (quarter) 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 .3 .6 -.6 -.8 3.1 .7 1.0 .1 -.6 -1 .lr -.1 - .7 -1.2 .4 1.5 1.3 .6 .5 .3 ,9p 1.2 -2.1 .9 -.7 1.9 .0 .4 .8 .9r -1.9 -2.9 2.0 1.0 1.5 .5 -.8 1.0 .2 .8 -1.9 -. 1 .1 1.2 .2 .6 .2 .5 -.7 .8 -.9 -.5 1.9 -.8 .2 -.1 1.0 - .5 2.4 - .3 - .1 .4 -.2 .5 .2 .5r - .9 2.3 - .2 .5 .6 -1.7 .7 .9 .4 r .0 2.1 -2.2 1.0 .7 .4 .5 -.2 .2 Coincident index 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 149.3 150.7 146.8 138.4 134.3 149.5 158.4 162.9 165.6 173.lr 149.4 149.6 147.2 139.9 133.5 150.6 159.0 163.4 168.2 17 4.7p 151.2 148.1 147.2 139.2 134.6 151.1 159.3 162.9 168.Or 149.1 145.1 147.1 138.0 135.6 152.6 160.5 165.6 168.Or 150.6 142.4 146.9 138.8 137.9 153.9 160.2 164.3 167.6 150.6 141.1 147.5 137.3 139.8 155.4 159.5 163.7 168.Or 151.0 140.8 147.6 136.4 140.7 155.7 159.7 164.4 1 6 9.4r 150.6 141.2 147.3 135.2 140.8 156.0 160.9 164.8 170.Or -1.9 .8 -1.7 .8 1.5 -.3 .6 .7 -. 1 -.3 .5 .5 -1.8 1.3 1.4 -.3 - .1 -1.1 -. lr .1 - .7 .3 1.1 - .6 .7 .4 .3 1.6 •9p 1.2 -1.0 .0 -.5 .8 .3 .2 -.3 -.lr -1.4 -2.0 - .1 -.9 .7 1.0 .8 1.7 .0 1.0 -1.9. -. 1 .6 1.7 .9 -.2 -.8 -.2 .0 -.9 .4 -1.1 1.4 1.0 -.4 -.4 .2 .3 - .2 .1 - .7 .6 .2 .1 .4 .8 - .3 .3 -.2 -.9 .1 .2 .8 .2 .4r .3 -.3 - .6 1.1 .6 - .4 1 .7 2.2 .4r 149.9 145.3 143.0 132.7 145.9 157.7 161.6 165.8 172.Or 150.0 146.1 140.9 132.6 147.5 158.8 163.0 167.4 173.3r (1967=100) 150.4 142.7 146.5 134.5 143.3 156.5 160.9 165.8 170.lr 150.3 144.2 144.5 132.9 145.0 156.5 160.8 165.4 172.5r Co incident index— percent change from precedine 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 -1.1 .7 .1 .6 .1 .5 -.1 .8 -1.2r -.1 1. 1 -.5 -.5 1.8 .3 .0 .6 .1 -.1 1. 1 -1.4 -1.2 1.2 .0 -. 1 -.2 1.4 m ont h (quarter) -.3 .8 -1.0 -.2 .6 .8 .5 .2 - .3r .1 .6 -1.5 - .1 1 .1 .7 .9 1.0 .8 126.3 120.1 124.5 120.5 115.1 130.1 138.5 143.4 142.8r 126.1 123.0 124.4 119.2 116.0 130.1 139.5 142.4 142.9r 1.0 -.4 1.3 -2.5 1.1 2.9 .8 .8 .7 r Lagging index (1967=100) 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 119.2 126.2 121.7 126.5 117.8 115.0 131.6 140.5 144.6 14 2.5 r 119.7 127.1 120.7 125.6 117.9 116.7 131 .9 141 .1 142.1 1 4 2.6p 118.8 130.2 119.0 125.8 116.9 118.1 132.9 142.3 141.3 121.7 132.3 119.0 126.3 115.9 120.6 133.3 140.5 141.8 121.0 129.6 122.2 126.3 114.2 122.9 134.9 141.4 141.8 122.3 125.5 122.4 126.5 113.8 124.9 134.9 141.6 141.9 122.3 121.8 122.5 125.8 113.6 125.8 135.3 141.8 140.9 123.0 120.5 123.3 124.0 114.6 127.6 135.6 142.2 140.7r 124.7 119.4 124.7 123.4 114.4 128.9 137.1 141.6 142.4 125.8 119.0 125.0 122.1 114.1 130.1 138.5 143.7 1 4 1.8r 119.2 127.8 120.5 126.0 117.5 116.6 132.1 141.3 142.7 121.7 129.1 121.2 126.4 114.6 122.8 134.4 141.2 141.8 2.1 1.3 -.2 1 .1 -2.6 1.3 1.5 1.8 -.3 2.1 1.0 .6 .3 -2.5 5.3 1.7 - .1 Lagging index — percent change from preceding month (quarter) 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1.0 .1 - 1.1 1.7 - 1.2 -.9 1.2 .7 1.5 -. 3 r .4 .7 - .8 - .7 .1 1 .5 - .8 2.4 -1 .4 .2 - .8 1.2 2.4 1.6 .0 .4 -.9 2.1 .2 .8 .3 -.6 -2.0 2.7 .0 -1.5 1 .9 1.2 .9 -1.3 .4 .0 .4 -1 .7 .Ip p, preliminary. - .6 .6 1.1 -3.2 .2 .2 -.4 1.6 .0 .1 .1 .0 -2.9 .1 -.6 -.2 .7 .3 .1 - .7 .6 -1 .1 .7 -1 . 4 .9 1 .4 .2 .3 - . lr 1 .4 -.9 1 .1 -.5 -.2 1.0 1 ,1 - .4 1 . 2r .9 -.3 .2 - 1.1 -.3 .9 1.0 1.5 -. 4r .4 .9 -.4 -1.3 .9 .0 .0 -.2 .lr -.2 2.4 - .1 -1 .1 .8 .0 .7 - .7 .lr - .6 .5 - .4r r, revised. NO T E : Q u a r t e r l y d a t a a r e a v e r a g e s of m o n t h l y S e e t a b l e 2 for c o m p o s i t i o n of the i n d e x e s . figures Quarterly percent changes are computed from quarterly data. Table 2. Net Contributions of the Individual Components to th e Leading, Co incident, Nov. 1987 Dec. 1987 Lagging Indexes Net contr ibuti on to index Basic data Indicator and Jan . 1988 Feb . 1988 Nov t0 Dec Dec. t0 Jan . Direction of change Jan . t0 Feb. Jan . to Feb. LEADING INDICATORS Average workweek, production workers, manufacturing (hours)................. 41.2 41.0 41 .1 4 0 .9p ¿Average weekly initial claims, state unemployment insurance (thousands)... 293 312 351 321 New orders, mfg., consumer goods and materials (billions of 1982 dollars). 85.93 Vendor performance, companies receiving slower deliveries from vendors (pet.) 66 86.60r 71 84 .81r 85.46p 68 66 . 16 .08 -.20 - .19 -.35 .33 + .04 -.11 .05 + .22 - .13 -.11 - .25 .10 -.14 + Contracts and orders, plant S< equipment (billions of 1982 do ll ar s)........... 37.52 41 .74r 43 .51r 41.41p Building permits 117.1 108.5 100.2 113.4 - .25 - .26 .49 #Change in inventories on hand and on order (ann. rate, billions of 1982 $) 32 .64r 4 0.89r 36.42p NA .22 -.12 NA #Change in sensitive materials prices (percent)............................... 1. 10 .08 - .16 - .17 -.13 (index: 1967 = 10 0)...... .72 .33 - Stock prices, 500 common stocks (index: 1941-43 = 10 ) ................... 245.01 240.96 250.48 258.13 - .11 .26 .25 + Money supply (M2) 2 4 2 4 .9r 2 4 2 4 .5r 2 4 3 5 .9r 2449.5p - .01 .16 .24 + 6.3r 12.7r .Op .36 - .72 NA .37 -1.10 .90 (billions of 1982 $).. Change in credit--business and consumer borrowing (annual rate, pe rcent).... NA Percent change in Leading Index....... COINCIDENT INDICATORS Employees on nonagricu1tura 1 payrolls (thousand s)............................ 103285 103612r 103786r 104317p .26 .14 .55 + Personal income less transfer payments (annual rate, billions of 1982 $ )... 2722.7r 2 7 4 8 .4r 2737.Or 2757.2p .47 - .21 .48 + Industrial production, total (index: 1977=100)...................... 133.2r 133.8r 1 3 4 .2r 1 3 4 .4p . 13 .08 .05 + 435121r 436886r 437785p Manufacturing and trade sales (millions of 1982 do llars)........... NA .09 .05 NA .76 - .12 .92 14.4 - . 10 -.10 .00 .00 .00 NA Percent change in Coincident Index.... LAGGING INDICATORS ¿Average duration of unemployment (weeks)................................. 14.0 14.2 14.4 Ratio, deflated inventories to sales, manufacturing and trade (ratio)...... 1.53r 1.53 1.53p NA Labor cost per unit of output, mfg.-actual as percent of trend (percent). 98.5 98.Or 98.2r 9 8 .2p - .18 .07 .00 0 Average prime rate charged by banks (percent)............................... 8.78 8.75 8.75 8.51 - .02 .00 -.25 - .50 -.66 .27 + - .08 .38 NA .07 - .28 .07 Commercial and industrial loans outstanding (millions of 1982 $ ) .... 362687r Ratio, consumer installment credit to personal income (percent)............ 15.84 369558r 360363r 15.82r 15.92p 362928p NA Percent change in Lagging In de x....... 0 ¿ Series is inverted in calculating the ompoB ite index: a decrease in this serie 8 iS considered an upwa rd movement. # Smoothed by a weighted 4-month moving verage NA, not available. p , pr elimi n a r y . (with weight s 1,2,2,1) r, revised. placed at the term inai month of the span . es timate d. NOTE: The net contribution of an individual component is that component 's share in the composite movement of the group. The percent change in the index equals (except for rounding differences) the sum of the net contributions of the individual components plus the trend adjustment factor of 0.139 for the leading index, -0.175 for the coincident index, and 0.018 for the lagging index.
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