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UNITED STATES DEPARTMENT OF BUREAU OF ECONOMIC ANALYSIS ! ™ a n u s FOR WIRE Feliks W I l f - TRA N S M I S S I O N ■■ ^ W A S H IN G T O N , D .C . 8:30 A.M. EST, MONDAY, 20230 D E C E M B E R 30, 1985 Tamm (202)523-0535 COMPOSITE The Novembe r released BEA 85-65 INDEXES OF LEADING, COINCIDENT, INDICATORS: NO VE M B ER 1985 AND LAGGING composite index of leading indicators increased 0.1 percent in to 171.5 (1967=100), ac cording to p r el im in ar y estimates today by the Commerce D e par tm ent 's Bureau of Economic Analysis. On the basis of more complete data, the index increased 0.4 percent in October and 0.4 percent in September. A month ago, the bureau reported estimates that showed the index increased 0.3 percent in October and 0.4 percent in September. Change in credit outstan di ng was the major contrib uto r to the October revision. Four of 11 indicators available for No vember contributed to the increase in the index. They were, ordered from the largest positive contributor to the smallest: stock prices, net business formation, change in sensitive m at eri al s prices (the we ighted 4-month moving average of the mo n t hl y changes had a positive effect on the index even though sensitive prices decreased in November), and manufact ur ers ' new orders for consumer goods and m a t er ia ls in 1972 dollars. Five of 11 made negative contributions. They were, ordered from the largest negative contributor to the smallest: change in credit outstanding, vendor performance (i.e., companies receiving slower deli veries from vendors), contracts and orders for plant and equipment in 1972 dollars, bu ilding permits, and average weekly initial claims for state unemp loy men t insurance. Two indicators were 1972 dollars. unchanged: average wo rk wee k and money supply in The composite index of coincident i n d i c a t o r s , a m on thl y a p p ro xi ma ti on of aggregate economic activity, increased 0.3 percent in Nov ember to 161.2 (1967=100). On the basis of more complete data, the index dec reased 0.1 percent in October and was un changed in September. The composite index of lagging indicators decreased 0.2 percent in Nov ember to 130.4 (1967=100). On the basis of more complete data, the index increased 1.2 percent in October and 1.2 percent in September. A record ed messa ge that provides current data for the composite indexes is jin operation. This 4-minute recording, which will be updated monthly, can be heard by telephoning (202)898-2450. - 2 - The leading index is de si g n e d to pr ed ic t m o n t h l y m o v e m e n t s in a g g r e g a t e e c o n o m i c ac ti vi ty , wh ic h is a p p r o x i m a t e d by the co i n c i d e n t index. The lagging index is e x p e c t e d to move, af te r a time lag, in the same d i r e c t i o n as the c o i n c i d e n t index and thus to c o n f i r m the m o v e m e n t s in the c o i n c i d e n t index. These conc ep ts are e x p l a i n e d more fully in the 19 84 e d i t i o n of H a n d b o o k of Cy cl ic al I n d i c a t o r s (price $5.50, stock number 0 0 3 - 0 1 0 - 0 0 1 2 7 - 5 ) , w h i c h is a v a i l a b l e from the S u p e r i n t e n d e n t of D o c u me nt s, U.S. G o v e r n m e n t P r i n t i n g Office, W a s h i n g t o n , DC 20402. More data on the c o mp os it e indexes, as we ll as other im po rt ant m e a s u r e s of e c o n o m i c activity, appe ar each m o n t h in B u si ne ss C o n d i t i o n s D i g e s t , also a v a i l a b l e from the S u p e r i n t e n d e n t of Do c u m e n t s . An nu al s u b s c r i p t i o n : $44.00. Next r e le as e d a t e : J a n u a r y 30 for the D e c e m b e r c o mp os it e indexes. COMPOSITE INDEXES -1 180 170 H 160 150 140 130 120 110 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 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 lags (+), in months, from the business cycle turning dates. Table 1. Composite Indexes of Leading, Coincident, and Lagging Indicators Jan . Year Feb . Mar . Apr . May June July Aug . Lead ing index 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 126 .1 134.5 141 .0 147.7 141 .4 142.1 135.1 145.2 164.5 166.3 128.0 136.5 142.8 147.5 140.4 140.4 135.7 147.4 166 .5 167.6 128.8 138.4 144.9 149 .3 137.4 141 .7 134.7 150.2 167.2 167.8 132.2 129.3 130.5 131 .6 138.5 139.8 138.9 138.5 146 .4 146 .9 145.4 146 .3 146.4 147 .6 146.5 145.2 133 .4 132.0 135.1 130.9 144.6 143.2 144.5 142.9 136.2 136.2 136 .0 135.5 152.5 154.4 158.2 157.3 168.2 166.7 168.1 163.9 166 .9 r 1 6 7.4 r 16 7 .6 r 1 6 8.5 Leading i n d e x - p e r c e n t 1976 1977 1978 1979 1980 1 981 1982 1983 1984 1985 2 .7 0 .0 -1 .0 0 .3 0 .6 -0.6 -0.8 3 .1 0 .7 1 .3 1 .5 1 .5 1 .3 -0 .1 -0.7 -1 .2 0.4 1 .5 1 .2 0.8 0.6 1.4 1 .5 1 .2 -2.1 0.9 -0.7 1 .9 0.4 0.1 0.4 0.1 1 .0 -1 .9 -2.9 2.0 1 .0 1 .5 0.5 -0.5 0.9 0 .3 0.1 0.8 -1 .9 -0.1 0.1 1 .2 0.1 rO .3 0.8 0.6 0.3 -0.7 0.8 -0.9 -0.5 1 .9 -0.9 0 .1 131 .9 140.5 146.2 144.5 138.3 142.4 136 .1 158.9 164.4 170 .0 change Coincident 1976 1977 1978 1979 1980 1981 1982 1983 1 984 1985 index — percent 134.5 142.4 147.2 140.5 143.0 136.2 140.9 163.4 164.1 0.4 0.4 0.4 0.0 2 .1 -2 .2 1 .0 0.7 0.8 0.4 -0.2 0.6 0.7 -1 .9 0.8 -1 .7 0.8 1 .5 -0.9 rO .4 1 .0 -0.2 -0.2 -1 .1 0 .7 0 .1 0.6 0.1 0.5 p 0 .1 change 0.2 0.7 0.1 1 .0 -1 .9 -0.1 0.6 1 .7 0.9 r - 0 .2 0.4 0.5 0 .6 0 .3 -0.2 0.1 -0.7 0.6 0.2 0.1 4.2 2 .3 0.6 0.4 -0.8 -1 .0 -1 .1 5.7 2.0 1 .6 -0.5 0.5 0.2 0.4 0.7 -0.8 -0.6 0.1 1 .4 rO .4 p, preliminary. -0.5 -0.1 0.6 -0.8 2.4 -1.4 -0.2 -1 .2 1 .3 0.8 -0.5 0.5 -0.6 2 .4 1 .6 0.0 0 .6 -0.8 1 .6 rO .0 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 r - 0 .1 0.3 -0.1 0.5 0.0 -2.9 0 .1 -0.4 -0.1 1 .1 0 .2 2.3 1 .9 2 .5 -0.9 -5.4 1 .9 0.5 4.8 1 .0 rO .1 132.2 140.0 146.1 144.7 138.2 141.5 136.6 159.0 164.7 169.7 133.4 142.0 147 .6 140.8 142.9 136.7 139.6 162.8 164.5 0.9 1 .4 1 .0 -2.7 3.4 -3 .4 2.2 2.4 -0.1 122.6 124.6 125.5 132.6 134.9 129.5 143.4 145.7 138.5 150.7 150.0 150.1 142.9 141 .6 149.5 147.2 147.1 147.1 135.4 139.2 138.0 137.8 134.1 141 .6 156.1 150.4 154.0 r l 58.9 r l 59.9 r160.3 126.6 137.3 148.5 150.1 145.2 142.8 132.7 146.1 157.7 0.2 0.2 0.6 -0.3 0.3 -0.2 -0.9 0.1 0.2 0.9 from preceding month index 0 .1 0.9 0.1 -0.1 1 .1 -0.5 -0.5 1 .8 0.3 rO .0 -0 .2 0.6 0.9 -0.1 1 .1 -1.4 -1 .2 1 .2 0.0 r - 0 .1 (quarter) 1 .2 0.4 0.7 -0.3 0.8 -1 .0 -0.2 0.6 0.8 p0.3 1 .6 2.4 3.5 0 .1 -4.4 0 .1 -0.9 2.8 2.4 0.6 0.7 1 .7 1 .6 0.4 -0.9 -0.1 -1 .9 2 .8 1.4 0.3 0.9 1 .8 1 .9 -0.4 2.5 -2.9 -2.0 3 .2 1 .0 103.0 103.4 105.4 107.0 114.8 112.7 121 .7 123.3 120.6 129.1 121.2 123.5 125.3 122.7 109.9 111 .4 116 .2 119.9 r 1 2 7 .0 r 1 2 8.2 103.9 108.9 116.8 126 .1 120.7 124.6 118.4 110.2 121.9 (1967= 100) from preceding month (quarter) 0.0 0.9 0.4 0.6 -1 .1 0.7 -1 .6 0.5 0.8 r - 0 .1 0.7 0.5 0.5 1 .4 -0.9 1 .1 -0.7 -0.5 1 .0 rl .2 0.3 0.6 -0.1 0.9 -0.3 0 .2 -1 .0 -0.1 0.8 rl .2 -0.4 0 .6 1 .6 0.4 0.9 -0.4 -1 .7 0.4 -0.2 p-0.2 -0.1 0.4 0.8 -0.2 2.4 -0.1 -1 .3 0.8 rO .2 -1 .2 0 .2 2.7 2.1 1 .3 -0.2 0.7 -2.6 1 .0 r 2 .4 00 o 1 -0.3 0 .1 1 .8 1 .0 0.1 -1.1 1 .4 -0.9 -1 .0 rl .8 IVQ 1 .3 0 .6 -0.3 -1.4 4.6 -1 .8 0.5 2 .8 -1 .8 rl .4 0 .7 0.6 -0.3 0.3 -0.3 -0.6 1 .1 0.6 -0.6 103.8 104.1 111.8 119.2 127.8 120.5 125.5 115.3 111.3 r124.8 0 .6 0.5 2 .1 -1.4 -2.0 -0.1 -0.9 0 .7 1 .0 rO .7 0.2 0 .8 0.8 0.0 -0.9 0.4 -1 .1 1 .4 1 .0 r-0.4 127 .6 130.5 136.5 139.1 142.9 146.5 148.2 146.8 132.1 139.7 141 .4 144.1 135.2 135.9 147.6 1 54. 7 167.7 166 .1 167 .2 r 1 6 7 .3 104.2 103.8 103.7 103.2 103.9 102.9 103.2 104.3 103.8 103.3 102.8 103.4 109.4 107.7 108.3 109.0 104.2 105.2 106.3 106.2 107.2 103.8 104.3 104.7 118.0 115.3 117.1 114.8 115.4 111.4 111.6 112.8 113.7 114.3 111.6 112.3 126 .1 124.7 125.8 126.3 122.3 123.0 118.8 121 .7 121.0 122.3 119.2 119.7 123 .0 119.4 119.0 120.1 132 .3 129.6 121 .8 126.2 130.2 125.5 120.5 127 .1 124.4 124.7 125.0 124.5 123.3 119.0 122.2 122.4 122.5 121 .7 119.0 120.7 120.2 118.2 116.7 121.4 124.8 124.3 122.3 125.1 126 .1 125.1 125.9 125.3 109.7 109.6 110 .0 110.9 109.8 109.7 110.3 115.8 114.4 113.5 111.0 115.7 121.7 r121 .9 119.8 121 .0 122.0 116.4 118.8 112.8 114.6 117.5 109.8 111 .3 rl24.1 rl24.6 rl25.6 r 1 2 5.6 rl27 .7 rl27 .6 r 12 7 .8 r 12 7 .7 r 1 2 9.2 r l 30 .7 p 13 0 .4 0.6 1 .3 1 .2 1 .2 -1 .0 0.0 -0.5 0.8 0 .3 rO .2 11 IQ (1967= 100) 3.0 2.3 0.9 1 .0 -0.4 1 .3 -2.5 1 .1 2.9 rO .8 1 .2 0.7 0.9 0 .1 -0.7 0.3 1 .1 -0 .6 0.7 rO .4 I IQ index (1967=100) Lagging index--percent change 1 976 1977 1978 1979 1980 1981 1982 1 983 1984 1985 132.4 132.2 133.5 141 .1 141 .9 141 .6 146.8 147.9 147.6 141 .7 140.1 144.5 141.2 142.4 143 .4 139.3 137.0 136.9 138.6 139.4 137.5 162.4 160.0 162.5 164.2 165.7 165.1 170 .6 r 171 .3 p 171 .5 IQ 0.8 0.7 0.9 0.1 0.6 -1 .5 -0.1 1 .1 rO .7 1 .6 0.4 -0.7 -0.3 0.5 0 .5 -1 .8 1 .3 1 .4 r - 0 .3 Lagging 1 976 1977 1978 1979 1 980 1981 1982 1983 1984 1985 Dec . 121 .4 123.6 126.8 127.8 122.9 124.3 124.6 124.8 125.3 125.5 125.6 125.3 136 .6 137.2 138.1 129.2 134.6 135.8 128.3 130.9 131 .6 132.5 133 .6 134.3 146.1 147.4 148.4 149.7 140.0 143.0 143.1 144.2 145.0 137.1 138.3 145.9 149.3 149.4 151.2 150.6 150.6 150.6 150.4 150.3 149.9 150.0 149.1 151 .0 141.2 144.2 145.3 146.1 150.7 149.6 148.1 145.1 142.4 141.1 140.8 142.7 146.9 146.5 143 .0 140.9 146.8 147.2 147.2 147.1 147.5 147 .6 147 .3 144.5 132.6 138.4 139.2 138.0 135.2 132.7 139.9 138.8 137.3 136.4 134.5 132.9 145.0 147.5 139.8 140.8 143.3 145.9 134.3 134.6 135.6 137.9 140.7 133.5 152.6 153.9 155.4 155.7 156 .0 156 .5 156.5 157.7 r 1 5 8.8 149.5 150.6 151.1 rl58.4 rl59 .0 r l 59.3 rl60.4 r 16 0.0 rl59.3 r l 59.4 r 160.8 rl60.8 r 1 60.7 p 161 .2 Coinc ident 1976 1977 1978 1979 1980 1981 1982 1 983 1984 1985 Nov . Oct. from preceding month (quarter) -0.2 1 .4 0 .6 -0.5 2.4 -0.3 -0.1 0.4 0 .3 rO .9 0.5 -0.9 -1 .0 -0.9 2 .3 -0.2 0.5 0.6 -1 .7 rO .5 Sept . 1 .2 0.8 2 .1 1 .0 0.6 -0 .2 -3.4 4.4 rl .8 0.4 1 .5 1 .9 1 .3 -6 .6 1 .9 -2.1 -1 .3 3 .2 rO .9 0.5 1 .8 1 .7 2.3 0 .1 0.9 -3 .5 0 .3 1 .7 r, 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 Net Contributions of the Individual Components to the Leading, Coincident, and Lagging Indexes Table 2. Net Basic data contribution to index Direct ion of change Indicator Aug . 1985 Sept 1985 Oct . 1985 Nov . 1985 Aug . to Sept Sept t0 Oct . Oct . t0 Nov . Oct . to Nov . LEADING INDICATORS Average workweek, production workers, manufacturing (hours) ................... 40.6 40.7 40.7 p 4 0 .7 0.08 0.00 0.00 0 *Average weekly initial claims, state unemployment insurance (thousands).... 375 381 367 371 -0.04 0.10 -0 .03 - 38.14 38.50 r3 8.94 p 3 9.16 0 .05 0.06 0 .03 + New orders, mfg., consumer goods and materials (billions of 1972 dollars)... Vendor performance, slower deliveries companies receiving from vendors (pet.).. 42 42 46 42 0 .00 0.16 -0.18 - 1967=100). 117.6 r 11 7.4 r115.3 p 11 6 .1 -0 .02 -0.25 0.11 + Contracts and orders, plant & equipment (billions of 1 972 d o l l a r s ) .............. 15.65 16.40 r l 5.72 P 1 5 .05 0.10 -0 .09 -0.10 - Building permits - Net business formation (index: 1967=100) ....... 142.3 r144.2 134.6 132.5 0.04 -0.21 -0.05 ^Change in inventories on hand and on order (ann. rate, billions of 1972 $).. r-2 .03 r - 2 .15 p-1 .08 NA -0.01 0 .06 NA #Change in sensitive materials prices (percent)................................. -0.52 r-0.47 r-0 .22 -0.08 0.02 0.10 0 .06 Stock prices, 500 common stocks (index: 1941-43 = 1 0 ) ...................... 188.31 184.06 186.18 197.45 -0.14 0.07 0.40 + 0.00 0 - (index: $)... 975 .3 r 9 7 9.2 977.9 p 9 77.9 0.13 -0.04 Change in credit— business and consumer borrowing (annual rate, perc e n t ) ....... r 8.4 r 9 .0 rl 5.6 pll .1 0.03 0 .34 -0.26 0 .35 0.41 0.12 Money supply (M2) (billions of 1972 Percent change in Leading Index....... + COINCIDENT INDICATORS Employees on nonagricultural payrolls (thousands) ............................... 97,977 r 9 8 ,217 r 9 8 ,571 p 9 8 ,753 0.20 0.30 0.20 + Personal income less transfer payments (annual rate, billions of 1982 $ ) .... r 2 ,51 3.0 r 2 ,516 .9 r 2 ,521 .6 P2 ,527 .7 0 .08 0.09 0.16 + Industrial production, total (index: 1977 = 1 0 0 ) ........................ r12 5 .2 rl25 .0 r124.6 p l 25.1 -0.04 -0.09 0.14 + Manufacturing and trade sales (millions of 1 972 doll a r s ) .............. rl84,052 rl 83,793 p 182,136 NA -0.03 -0.20 NA 0.00 -0.06 0.31 Percent change in Coincident Index.... LAGGING INDICATORS *Average duration of unemployment (weeks)................................... 15.6 1 5.5 15.3 16.0 0.05 0.09 -0.47 Ratio, deflated inventories to sales, manufacturing and trade (ratio) ........ 1.54 rl .54 pl .56 NA 0.00 0.26 NA Labor cost per unit of output, mfg.-actual as percent of trend (percent)... r83.4 r83.4 r 8 3 .5 p83 .0 0.00 0.04 -0.27 Average prime rate charged by banks (percent)................................. 9.50 9.50 9.50 9.50 0.00 0 .00 0.00 0 Commercial and industrial loans outstanding (millions of 1972 $ ) ....... rl 28,236 rl28,3 89 r l 2 9 ,884 p 131,460 0 .03 0.31 0.47 + Ratio, consumer installment credit to personal income (percent)............... r 1 5.5 2 r l 5.80 p 15.92 NA 1.07 0.46 NA 1.17 1 .16 -0.23 Percent * Series change in Lagging Ind e x ....... is inverted in calculating the composite # Smoothed by a weighted 4-month moving average NA, not available. p, preliminary. index: a decrease (with weights r, revised. in this 1,2,2,1) series - is considered an upward movement. placed at the terminal month of the span. e, estimated. 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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