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UNITED STATES DEPARTMENT OF BUREAU OF ECONOMIC ANALYSIS ™ = FOR WIRE W W ^ TRANS MI SSI ON Larry Moran = W A S H IN G T O N , D .C . 8:30 A.M. 20230 E D T , WEDNESDAY, JULY 31, 1985 (202)523-0777 COMPOSITE INDEXES OF LEADING, COINCIDENT, INDICATORS: JUNE 1985 BEA 85-39 AND LAGGING The composite index of leading indicators increased 1.0 percent in June to 168.5 (1967=100), according to pre li min ar y estimates released today by the Commerce Depar tme nt 's Bureau of Economic Analysis. On the basis of more complete data, the index increased 0.1 percent in May and decreased 0.5 percent in April. A month ago, the bureau reported estimates that showed the index increased 0.7 percent in May and decreased 0.6 percent in April. Change in inventories on hand and on order was the major contributor to the May revision. Average wor k we ek was the major contributor to the April revision. Six of 10 indicators available for June contributed to the increase in the index. They were, ordered from the largest positive contributor to the smallest: net business formation, money supply in 1972 dollars, stock prices, average workweek, contracts and orders for plant and equipment in 1972 dollars, and change in sensitive ma terials prices (the weighted 4-month moving average of the m o nth ly changes had a positive effect on the index even though sensitive prices decreased in June). Three of 10 made negative contributions. They were, ordered from the largest negative contributor to the smallest: building permits, man ufacturers' new orders for consumer goods and mate ri als in 1972 dollars, and average weekly initial claims for state unemployment insurance. One indicator was unchanged: vendor performance receiving slower deliveries from vendors). (i.e., companies The composite index of co incident i n d i c a t o r s , a month ly ap pr oxi ma tio n of aggregate economic activity, increased 0.1 percent in June to 160.0 (1967=100). On the basis of more complete data, the index decreased 0.3 percent in May and increased 0.9 percent in April. The composite index of lagging indicators decreased June to 126.3 (1967=100). On the basis of more complete increased 1.7 percent in May and was unchanged in April. 1.4 percent in data, the index - 2 - The leading index is designed to predict m o nth ly movements in aggregate economic activity, which is ap pr oximated 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 Han db ook of Cyclical Indicators (price $5.50, stock number 003- 01 0-0 01 27- 5) , which is available from the Superint en den t of Documents, U.S. Government Printing Office, Washington, DC 20402. More data on the composite indexes, as well as other important mea sures of economic activity, appear each month in Business Conditions D i g e s t . also available from the Su perintendent of Documents. Annual subscription: $44.00. Next release d a t e : August 30 for the July composite indexes. COMPOSITE INDEXES (N ov.) (M ar.) (Jan.) (July) (July) (N ov.) NOTE: P (peak) indicates the end of general business expansion and the beginning of recession; T (trough) indicates 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 laqs (+) in months from the business cycle turning dates. a x / » > Table 1. Composite Indexes of Leading, Coincident, and Lagging Indicators Ye a r 1976 1977 1978 1 979 1 980 1 981 1 982 1 983 1984 1 985 Jan. 1 26 .1 134.5 141 .0 1 47. 7 141 .4 142. 1 135. 1 145.2 164.5 166.3 Feb. Mar . 128.0 136. 5 142. 8 147.5 140. 4 140. 4 1 35. 7 147. 4 166 .5 16 7 . 7 May Ap r . 128. 8 138. 4 144. 9 149.3 1 37. 4 141 . 7 134. 7 1 50.2 167.2 16 7 . 6 r 129.3 138.5 146 .3 146. 4 133 .4 144.6 136 .0 152.5 168.1 16 6 . 7 130.5 138.9 146 .4 147.6 130.9 144.5 136.2 1 54.4 168.2 r 166 .9 Leading 1 976 1977 1 978 1 979 1 980 1 981 1 982 1 983 1 984 1 985 2.7 0.0 - 1 .0 0 .3 0.6 -0.6 -0.8 3.1 0.7 1 .3 0 .6 1 .4 1 .5 1 .2 -2.1 0.9 -0 . 7 1 .9 0 .4 - 0 .1 1 .5 1 .5 1 .3 -0.1 -0.7 - 1 .2 0 .4 1 .5 1 .2 0.8 June 0.4 0.1 1 .0 - 1 .9 -2.9 2.0 1 .0 1 .5 0.5 r - 0 .5 131 .6 139.8 146.9 146.5 132.0 143.2 135.5 157.3 166.7 p 16 8 . 5 July Leading index 132.2 138.5 145. 4 145. 2 135. 1 142. 9 136.2 158. 2 r 1 6 3 .9 131 .9 140.5 146. 2 144.5 138.3 142 .4 1 36 . 1 1 58. 9 164.4 index— percent 0.8 0.6 0.3 -0 . 7 0 .8 -0.9 -0.5 1 .9 - 0 .9 p i .0 0 .9 0.3 0.1 0.8 - 1 .9 - 0 .1 0 .1 1 .2 0.1 rO .1 Aug . change 121 .4 128.3 137. 1 149.3 1 50.7 146. 8 138. 4 134.3 149.5 r l 58. 2 122 .9 129.2 138.3 149 .4 149.6 147.2 139.9 133.5 150.6 r l 58.5 r 1 23 .6 130. 9 140 .0 151.2 1 48 . 1 147.2 139.2 134.6 1 51 .1 l 58.9 124.3 131 .6 143 .0 149. 1 145. 1 147. 1 138.0 135.6 1 52 .6 r l 60.3 r 124.6 124.8 133 .6 132.5 144.2 143. 1 1 50 .6 1 50 .6 142. 4 141 .1 146. 9 147. 5 138. 8 137.3 139. 8 137. 9 1 53 .9 1 55.4 l 5 9 . 8 P1 6 0 .0 Coincident 1 976 1 977 1.978 1 979 1 980 1 981 1 982 1 983 1 984 1 985 1 .6 0 .4 -0.7 -0.3 0.5 0.5 - 1 .8 1 .3 1 .4 -0.4 1 .2 0.7 0.9 0.1 -0 . 7 0 .3 1 .1 - 0 .6 0.7 0.2 0.6 1 .3 1 .2 1 .2 - 1 .0 0 .0 -0.5 0.8 0.3 0 .3 0.6 0.5 2 .1 - 1 .4 -2.0 -0.1 -0.9 0.7 1 .0 rO .9 125. 3 134.3 145.0 1 51 .0 140.8 147. 6 136 .4 140.7 r l 55 . 7 i n d e x - - se r c e n t 0.2 0.7 0.1 1 .0 - 1 .9 -0.1 0.6 1.7 0.9 r - 0 .3 0 .2 0.8 0.8 0.0 -0.9 0.4 - 1 .1 1 .4 1 .0 p 0 .1 1 976 1 977 1978 1979 1 980 1 981 1 982 1 983 1984 1 985 104. 3 103.8 111. 4 119.2 126.2 121. 7 1 26 .1 115.7 109. 8 r 124. 2 103. 8 104.3 111 .6 119. 7 127. 1 120.7 125.3 115. 8 111.3 r 124.9 103 .3 104.2 112.3 118. 8 130.2 119.0 125. 1 114.4 112.8 r l 25.9 103.4 102.8 102.9 104.7 105. 2 106 .3 111.6 112. 8 113. 7 121 . 7 1 21 .0 122.3 129.6 132.3 125.5 122 .4 122. 2 119.0 125. 1 124. 8 125.9 111.0 109. 8 113.5 114.6 116. 4 117. 5 r l 2 5 . 9 r l 2 8. 1 p 126 .3 Lagging 1976 1977 1 978 1979 1980 1 981 1 982 1 983 1 984 1 985 p, -0.3 0.1 1 .8 1 .0 0 .1 - 1 .1 1 .4 -0.9 - 1 .0 rl .7 -0.5 0 .5 0 .2 0 .4 0.7 -0.8 -0.6 0.1 1 .4 0 .6 prelim inary. -rO .5 -0.1 0.6 -0.8 2.4 - 1 .4 -0.2 - 1 .2 1 .3 0.8 r, - 0 .5 0 .5 -0.6 2 .4 1 .6 0 .0 0 .6 -0.8 1 .6 rO .0 103.2 106 .2 114. 3 122.3 121. 8 122. 5 124.3 109. 7 118. 8 index-percent 0.6 0 .5 1 .1 -0.6 -2.0 2.7 - 0 .6 -2.2 1 .6 rl .7 -0.5 1 .0 0 .8 1 .1 -3.2 0.2 - 0 .2 - 1 .1 0 .9 p-1.4 0.2 0.2 0.6 -0.3 0 .3 -0.2 -0.9 0 .1 rO .2 index 103.2 107.2 114.8 123.0 120.5 123 .3 122.3 110.3 r l 19.8 ch an g e 0.3 -0.1 0.5 0.0 -2.9 0.1 -0.4 -0.1 1 .1 132.2 141 .9 147.9 141.7 142 .4 136.9 138.6 162.4 164.2 Nov . Dec . 133.5 141 .6 147.6 140. 1 143 .4 137.0 139.4 162.5 165.2 134.5 142 .4 147.2 140. 5 143 .0 136. 2 140.9 163 .4 164. 1 p r e c e d i n g mo n t h 0.4 0.4 0 .4 0 .0 2 .1 -2.2 1 .0 0.7 0.8 index change 0.4 0 .5 0 .6 0 .3 - 0 .2 0.1 -0 . 7 0 .6 rO .2 Lagging 132 .4 141. 1 146. 8 144.5 141 .2 139.3 137.5 160.0 165. 7 from 125.5 134.6 145.9 1 50.6 141 .2 147.3 135.2 140.8 1 56 .0 Oct. IQ I IQ 11 IQ IVQ ( 1 9 6 7 = 1 00) - 0 .2 1 .4 0 .6 -0.5 2 .4 -0.3 -0.1 0 .4 rO .3 0.5 -0.9 - 1 .0 - 0 .9 2 .3 -0.2 0 .5 0.6 -1 . 7 Coincident 1 976 1977 1978 1979 1 980 1 981 1 982 1983 1 984 1985 Sept . -0.2 0.6 0.7 - 1 .9 0.8 - 1 .7 0.8 1 .5 -0.9 127. 6 136. 5 142. 9 148.2 139.7 141 .4 135.2 147.6 166. 1 167. 2 130.5 139. 1 146 .5 146.8 132. 1 144. 1 135.9 154. 7 167. 7 r p 16 7 . 4 132.2 140.0 146 .1 144. 7 138.2 141 .5 136.6 159.0 164 . 7 133 .4 142.0 147.6 140.8 142.9 136. 7 139.6 162. 8 164.5 1 .3 0 .6 - 0 .3 - 1 .4 4.6 - 1 .8 0.5 2 .8 - 1 .8 0.9 1 .4 1 .0 -2.7 3 .4 -3.4 2 .2 2 .4 -0.1 125.5 134.9 145. 7 150. 7 141 .6 147. 1 135.4 141 .6 l 56 .1 126 .6 137.3 148.5 1 50 .1 145.2 142.8 132. 7 146. 1 r l 57 . 7 0.7 1 .7 1 .6 0 .4 -0.9 -0.1 - 1 .9 2 .8 r l .4 0.9 1 .8 1 .9 -0.4 2.5 -2.9 - 2 .0 3 .2 1 .0 103 .4 107.0 114.8 123 .3 120.6 123. 5 122. 7 109. 9 l l 9.9 103. 9 108.9 116.8 126 .1 120.7 124. 6 118. 4 110. 2 r l 21 .9 0 .4 1 .5 1.9 1 .3 - 6 .6 1 .9 -2.1 - 1 .3 r 3 .2 0.5 1 .8 1.7 2.3 0.1 0.9 -3.5 0.3 r l .7 (quarter) 1 .0 -0.2 -0.2 - 1 .1 0.7 0.1 0 .6 0.1 0.6 0.7 0 .6 -0.3 0 .3 -0.3 - 0 .6 1 .1 0.6 -0.7 4.2 2 .3 0 .6 0.4 -0.8 - 1 .0 - 1 .1 5.7 2 .0 1 .6 126.8 137.2 148.4 149.9 145.3 143 .0 132.7 145.9 l 57.7 127. 8 138. 1 149. 7 1 50 .0 146 .1 140.9 132. 6 147. 5 r l 58. 9 mo n t h ( quarter) 2.3 1 .9 2.5 -0.9 -5.4 1 .9 0.5 4.8 1 .0 p 0 .1 ( 1 9 6 7 = 100) 125.6 135.8 146. 1 1 50 .4 142. 7 146.5 134.5 143 .3 r 156 .5 r 125.3 136 .6 147.4 150.3 144.2 144.5 132.9 145. 0 156 .5 r from p r e c e d i n g 0.1 0.9 0.1 -0.1 1 .1 -0.5 - 0 .5 1.8 rO .3 -0.2 0.6 0.9 - 0 .1 1 .1 - 1 .4 - 1 .2 1 .2 rO .0 1 .2 0.4 0.7 -0.3 0.8 - 1 .0 -0.2 0.6 rO . 8 0.8 0.7 0.9 0.1 0 .6 - 1 .5 -0.1 1 .1 0.8 103. 8 109.0 117. 1 126.3 120.1 124. 5 118.2 110. 0 r l 21 .7 r 103. 7 109. 4 118.0 126 .1 1 23 .0 124.4 116.7 110. 9 l 22. 1 122.6 124. 6 132.6 129.5 138.5 143 .4 150. 1 1 50 .0 149.5 142.9 147.2 147. 1 139.2 138.0 134. 1 137. 8 1 50 .4 154.0 r r 1 5 8 . 5 p 16 0 . 0 3.0 2.3 0.9 1 .0 - 0 .4 1 .3 -2.5 1 .1 2.9 0 .5 1 .6 2 .4 3 .5 0 .1 -4.4 0.1 -0.9 2.8 2 .4 p 0 .9 ( 1967=100) 103. 9 107.7 115. 4 124.7 119. 4 124. 7 121 .4 109. 7 r 121 .0 104.2 108.3 115.3 125.8 119.0 125.0 120.2 109.6 r l 22.0 103 .8 103 .0 104.1 105.4 111. 8 112.7 119. 2 1 21 . 7 127.8 1 29 . 1 121 .2 120. 5 125.5 125.3 115. 3 111.4 116.2 r 111.3 r l 25 .0 p i 26 . 8 f r om p r e c e d i n g mont h ( q u a r t e r ) 0 .0 0.9 0 .4 0.6 - 1 .1 0.7 - 1 .6 0.5 rO .8 0.7 0.5 0 .5 1 .4 -0.9 1 .1 -0 . 7 -0.5 r l .0 0 .3 0.6 -0.1 0.9 -0.3 0.2 - 1 .0 - 0 .1 rO .8 - 0 .4 0.6 1 .6 0 .4 0 .9 -0.4 -1 . 7 0.4 -0.2 -0.1 0 .4 0.8 -0.2 2.4 -0.1 - 1 .3 0.8 0.3 - 1 .2 0.2 2.7 2.1 1 .3 -0.2 0.7 -2.6 1 .0 2 .5 -0.8 1 .2 0 .8 2 .1 1 .0 0.6 -0.2 - 3 .4 4.4 p 1 .4 revised. NOTE: Quarterly data are averages of monthly figures. See table 2 for composition of the indexes. Quarterly percent changes are computed from quarterly data Table 2 Net Contributions of the Individual Components to the Leading, Coincident, and Lagging Indexes Net Bas i c Mar . 1 985 data Apr . 1985 May 1 985 Mar . t o Apr . June 1985 c o n t r i b u í ion to index D irection o f change May t 0 June Ap r . t o May May t o June LEADING INDICATORS Aver age workweek, p r o d u c t i o n w o r k e r s , m a n u f a c t u r i n g ( h o u r s ) ........................................... 40.4 r 4 0 .2 40.3 p40 .4 -0.15 0.08 0 .09 + i n i t i a l claim s, state i n s u r a n c e ( t h o u s a n d s ) .......... 389 387 383 392 0 .01 0 .03 -0.08 - m f g . , c o n s u me r goods and ( b i l l i o n s o f 1 972 d o l l a r s ) . . . 36.92 37.46 r3 7.88 p3 7 . 0 4 0 . 07 0 .06 -0.13 - ^Aver age w ee kl y unempl oyment New o r d e r s , m aterials Ve n d o r p e r f o r m a n c e , slower d e l i v e r i e s compani es r e c e i v i n g fr om ve nd or s ( p e t . ) . . 46 44 44 44 -0.08 0 . 00 0 .00 0 1967=100). 115.4 1 15. 4 112. 2 pl'15.4 0.00 -0.39 0.47 + C o n t r a c t s and o r d e r s , p l a n t & e q u i p m e n t ( b i l l i o n s o f 1 972 d o l l a r s ) .............................. 15. 89 14.14 r 14.83 pi 5.34 -0.25 0.10 0.09 + Building -0.14 - Net business formation (index: 138.8 135. 9 141 . 8 136.5 -0.06 0.13 ^ Ch an g e i n i n v e n t o r i e s on hand and on o r d e r ( a n n . r a t e , b i l l i o n s o f 1 972 $ ) . . r l 2 .33 r 8.96 p 0 .1 7 NA -0.19 - 0 .49 NA ^Change i n s e n s i t i v e m a t e r i a l s p r i c e s ( p e r c e n t ) ......................................................................... -0.97 - 0 .64 -0.22 -0.13 0.13 0.17 0 .04 + S t o c k p r i c e s , 500 common s t o c k s ( i n d e x : 1 9 4 1 - 4 3 = 1 0 ) ................................................ 179. 42 180 . 62 184.90 188. 89 0.04 0.15 0.16 + $)... 953 .6 r 94 9 . 2 r 9 5 4 .0 p 9 6 3 .0 -0.15 0.16 0.36 + Change i n c r e d i t — b u s i n e s s and co n s u me r b o r r o w i n g ( a n n u a l r a t e , p e r c e n t ) ............... 13.3 p l l .3 NA -0.08 - 0 . 02 -0.54 0.12 0.96 Money permits supply Percent (index: ( M2) change 1 9 6 7 = 1 0 0 ) .......... .. (b illio n s in of Leading 1972 r 11 . 7 I n d e x ............... NA COINCIDENT I NDICATORS E m p l o y e e s on n o n a g r i c u 11 u r a 1 p a y r o l l s ( t h o u s a n d s ) .................................................................... 96,910 r 9 7,120 r 9 7 , 3 86 p9 7 , 4 6 6 0.18 0 .23 0.09 + P e r s o n a l i nc o me l e s s t r a n s f e r p a y me n t s ( a n n u a l r a t e , b i l l i o n s o f 1 972 $ ) .......... 1,205.8 r l ,218.0 r l , 2 0 6 .3 pi ,209.7 0.50 -0.48 0.18 + In d u s tria l production, to ta l ( i n d e x : 1 9 7 7 = 1 0 0 ) ..................................................... r l 24.0 r l 24.3 r l 24.4 p 124.6 0.07 0 . 02 0 .06 + M a n u f a c t u r i n g and t r a d e s a l e s ( m i l l i o n s o f 1 972 d o l l a r s ) .............................. 179,626 r l 81, 754 p l 8 2 , 552 0.26 0.10 0.88 -0.31 0.13 Percent ch an g e in Coincident NA Index.... NA LAGGING I NDICATORS * A v er a g e d u r a t i o n o f unempl oyment ( w e e k s ) .............................................................................. Ratio , d e fla te d manufacturing in v e n to r ie s to sales, and t r a d e ( r a t i o ) .................. 15.9 16. 1 14.9 1 5.4 - 0 .09 0 .56 - 0 . 35 NA 1 . 57 r l .56 p i .55 NA -0.13 -0.13 output, m fg.-trend ( p e r c e n t ) . . . r 8 6 .3 r 85 .4 r 8 5.1 p 8 4 .6 -0.33 -0.11 -0.27 - A v e r a g e p r i m e r a t e c h a r g e d by ban ks ( p e r c e n t ) ......................................................................... 10. 50 10.50 10. 31 9.78 0 .00 - 0 .13 -0.55 - $ ) ................ r l 27, 069 r l 2 7,363 r l 28,133 p l 2 7 , 262 0.06 0.16 -0.26 _ R a t i o , c o n s u me r i n s t a l l m e n t c r e d i t t o p e r s o n a l i ncome ( p e r c e n t ) ................................. 15.11 1 5.22 p i 5.59 NA 0 .42 1 .42 0 .00 1 . 75 L abor c os t per u n i t a c t u a l as p e r c e n t of of C o m m e r c i a l and i n d u s t r i a l l o a n s o u t s t a n d i n g ( m i l l i o n s o f 1 972 Percent * Series ch an g e is in Lagging inverted in calculating # Smo ot h ed by a w e i g h t e d NA, n o t available. I n d e x ............... p, the composite 4- month mov i ng aver age prelim inary. r, index: (with a d ecr ease weights revised. NOTE: The n e t c o n t r i b u t i o n o f an i n d i v i d u a l c o mp o n e n t i s group. The p e r c e n t ch an g e i n t h e i n d e x e q u a l s ( e x c e p t f o r t h e i n d i v i d u a l c omponent s p l u s t h e t r e n d a d j u s t m e n t f a c t o r i n d e x , and 0 . 0 1 8 f o r t h e l a g g i n g i n d e x . e, in 1,2,2,1) this series placed at is the considered terminal NA - 1 .41 an u pwa r d mo v e me n t . mo n t h of the span. estimated. t h a t c o m p o n e n t ' s s h a r e i n t h e c o m p o s i t e movement o f t h e r o u n d i n g d i f f e r e n c e s ) t h e sum o f t h e n e t c o n t r i b u t i o n s o f of 0.139 f o r the l e a d i n g i nde x, -0 .1 7 5 f o r the c o i n c i d e n t
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