The Conference Board's Leading Economic Index Falls For Second Consecutive Month

Apr 18, 2001, 01:00 ET from The Conference Board

    NEW YORK, April 18 /PRNewswire/ -- The Conference Board reports today that
 the Composite Index of Leading Economic Indicators declined by 0.3% in March,
 after a 0.2% decline in February and a 0.5% gain in January.  The series has
 now declined for two straight months and five times in the last six months.
     "While the Leading Index declined for three consecutive months at the end
 of last year, the economy did not lapse into recession in the first quarter of
 2001," says Conference Board Economist Ken Goldstein.  "The latest readings
 suggest that the economy may be no stronger in the second quarter than it was
 in the first and that slower economic growth will continue into the summer.
 But still, no recession is on the horizon."
     The Conference Board's Coincident Index shows that the economy continues
 to expand, although at no more than a modest pace.  The Coincident Index rose
 0.1% in March, the same rate of change as in February, after no change in
 January.  The Lagging Index fell by 0.4% in March, the second consecutive
 monthly decline and the third decline in the last four months.  The increase
 in the Coincident Index and the decline in the Lagging Index mean the ratio of
 the coincident to lagging series rose for the third month in a row (which is a
 positive sign for economic growth).
 
     U.S. Composite Indexes of Leading, Coincident, and Lagging Indicators:
                                   March 2001
 
 The leading index decreased 0.3 percent, the coincident index increased
 0.1 percent,  and the lagging index decreased 0.4 percent in March.  Taken
 together, the three  composite indexes and their components suggest slow
 growth until late in the second  quarter of this year.
 
     -- With this month's decline, the leading index has dropped in five of the
        last six months, a continuation of its steady decline since January of
        last year.
     -- After reaching its most recent high in September 2000, the coincident
        index has been flat.  Growth in the manufacturing sector will determine
        the strength in the coincident index in the coming months.
     -- Despite the fall in the leading index and the flat coincident index,
        the ratio of coincident to lagging index is up again for the third
        straight month in March, indicating a potential for improved growth.
 
     LEADING INDICATORS.  Six of the ten indicators that make up the leading
 index decreased in March. The negative contributors to the leading index in
 March, from largest to smallest, were stock prices, vendor performance,
 average weekly initial claims for unemployment insurance, building permits,
 interest rate spread, and manufacturers' new orders for consumer goods.  The
 positive contributors to the index, from largest to smallest, were money
 supply, index of consumer expectations, and manufacturers' new orders for
 nondefense capital goods and materials.  Average weekly manufacturing hours
 held steady for the month of March.
     The leading index now stands at 108.5 (1996=100).  Based on revised data,
 this index decreased 0.2 percent in February and increased 0.5 percent in
 January.  During the six-month span through March, the leading index decreased
 1.2 percent with three of the ten components advancing (diffusion index,
 six-month span equals 30 percent).
 
     COINCIDENT INDICATORS.  Of the four indicators that make up the coincident
 index, only employees on nonagricultural payrolls decreased in March.  The
 three positive contributors, beginning with the largest, were personal income
 less transfer payments, industrial production, and manufacturing and trade
 sales.
     With the increase in the coincident index in March, the index now stands
 at 116.6 (1996=100).  Based on revised data, this index increased 0.1 percent
 in February and held steady in January.  During the six-month period through
 March, the coincident index remained at the same level.
 
     LAGGING INDICATORS.  The lagging index decreased 0.4 percent to
 106.9 (1996=100) in March.  Of the seven components of the lagging index,
 three increased in March.  The components that increased, from largest to
 smallest, were ratio of consumer installment credit to income, change in CPI
 for services, and ratio of manufacturing and trade inventories to sales.  The
 components that decreased, from largest negative contributor, were commercial
 and industrial loans outstanding, average prime rate charged by banks, average
 duration of unemployment, and change in labor costs per unit of output.  Based
 on revised data, the lagging index decreased by 0.3 percent in February and
 held steady in January.
 
     DATA AVAILABILITY.  The data series used to compute the three composite
 indexes and reported in the tables in this release are those available "as of"
 12 Noon on April 17, 2001.  At the time of the release, recent data for
 manufacturers' new orders for consumer goods and materials, manufacturers' new
 orders for nondefense capital goods, personal income less transfer payments,
 manufacturing and trade sales, inventories to sales ratio, consumer
 installment credit to income ratio, and change of labor cost per unit of
 output were based on estimates.  In addition, the personal consumption
 expenditure deflator for money supply and commercial and industrial loans
 outstanding were also based on an estimate.
 
                                     NOTICE
 
      The next release is scheduled for May 17, 2001 at 10:00 A.M.
 
     ABOUT THE CONFERENCE BOARD -- The Conference Board is a worldwide research
 and business membership group, with more than 2,700 corporate and other
 members in 60 nations.  One of the leading private sources of economic and
 business intelligence, The Conference Board is a not-for-profit, non-advocacy
 organization.
     In December 1995, the Conference Board assumed responsibility for
 computing the composite indexes from the U.S. Department of Commerce, which is
 in keeping with its mission to improve the business enterprise system and to
 enhance the contribution of business to society.
 
                       Summary Table of Composite Indexes
 
                             2000          2001           6-month
                              Jan      Feb      Mar     Sep. to Mar.
 
 
     Leading index           109.0    108.8    108.5 p
       Percent Change           .5      -.2      -.3 p      -1.2
       Diffusion              60.0     40.0     40.0        30.0
 
     Coincident Index        116.4    116.5    116.6 p
       Percent Change           .0       .1       .1 p       0.0
       Diffusion              25.0     75.0     75.0        62.5
 
     Lagging Index           107.6 r  107.3 r  106.9 p
       Percent Change           .0 r    -.3 r    -.4 p       0.1
       Diffusion              35.7     35.7     28.6        57.1
 
     p  Preliminary     r  Revised
     Indexes equal 100 in 1996
 
 

SOURCE The Conference Board
    NEW YORK, April 18 /PRNewswire/ -- The Conference Board reports today that
 the Composite Index of Leading Economic Indicators declined by 0.3% in March,
 after a 0.2% decline in February and a 0.5% gain in January.  The series has
 now declined for two straight months and five times in the last six months.
     "While the Leading Index declined for three consecutive months at the end
 of last year, the economy did not lapse into recession in the first quarter of
 2001," says Conference Board Economist Ken Goldstein.  "The latest readings
 suggest that the economy may be no stronger in the second quarter than it was
 in the first and that slower economic growth will continue into the summer.
 But still, no recession is on the horizon."
     The Conference Board's Coincident Index shows that the economy continues
 to expand, although at no more than a modest pace.  The Coincident Index rose
 0.1% in March, the same rate of change as in February, after no change in
 January.  The Lagging Index fell by 0.4% in March, the second consecutive
 monthly decline and the third decline in the last four months.  The increase
 in the Coincident Index and the decline in the Lagging Index mean the ratio of
 the coincident to lagging series rose for the third month in a row (which is a
 positive sign for economic growth).
 
     U.S. Composite Indexes of Leading, Coincident, and Lagging Indicators:
                                   March 2001
 
 The leading index decreased 0.3 percent, the coincident index increased
 0.1 percent,  and the lagging index decreased 0.4 percent in March.  Taken
 together, the three  composite indexes and their components suggest slow
 growth until late in the second  quarter of this year.
 
     -- With this month's decline, the leading index has dropped in five of the
        last six months, a continuation of its steady decline since January of
        last year.
     -- After reaching its most recent high in September 2000, the coincident
        index has been flat.  Growth in the manufacturing sector will determine
        the strength in the coincident index in the coming months.
     -- Despite the fall in the leading index and the flat coincident index,
        the ratio of coincident to lagging index is up again for the third
        straight month in March, indicating a potential for improved growth.
 
     LEADING INDICATORS.  Six of the ten indicators that make up the leading
 index decreased in March. The negative contributors to the leading index in
 March, from largest to smallest, were stock prices, vendor performance,
 average weekly initial claims for unemployment insurance, building permits,
 interest rate spread, and manufacturers' new orders for consumer goods.  The
 positive contributors to the index, from largest to smallest, were money
 supply, index of consumer expectations, and manufacturers' new orders for
 nondefense capital goods and materials.  Average weekly manufacturing hours
 held steady for the month of March.
     The leading index now stands at 108.5 (1996=100).  Based on revised data,
 this index decreased 0.2 percent in February and increased 0.5 percent in
 January.  During the six-month span through March, the leading index decreased
 1.2 percent with three of the ten components advancing (diffusion index,
 six-month span equals 30 percent).
 
     COINCIDENT INDICATORS.  Of the four indicators that make up the coincident
 index, only employees on nonagricultural payrolls decreased in March.  The
 three positive contributors, beginning with the largest, were personal income
 less transfer payments, industrial production, and manufacturing and trade
 sales.
     With the increase in the coincident index in March, the index now stands
 at 116.6 (1996=100).  Based on revised data, this index increased 0.1 percent
 in February and held steady in January.  During the six-month period through
 March, the coincident index remained at the same level.
 
     LAGGING INDICATORS.  The lagging index decreased 0.4 percent to
 106.9 (1996=100) in March.  Of the seven components of the lagging index,
 three increased in March.  The components that increased, from largest to
 smallest, were ratio of consumer installment credit to income, change in CPI
 for services, and ratio of manufacturing and trade inventories to sales.  The
 components that decreased, from largest negative contributor, were commercial
 and industrial loans outstanding, average prime rate charged by banks, average
 duration of unemployment, and change in labor costs per unit of output.  Based
 on revised data, the lagging index decreased by 0.3 percent in February and
 held steady in January.
 
     DATA AVAILABILITY.  The data series used to compute the three composite
 indexes and reported in the tables in this release are those available "as of"
 12 Noon on April 17, 2001.  At the time of the release, recent data for
 manufacturers' new orders for consumer goods and materials, manufacturers' new
 orders for nondefense capital goods, personal income less transfer payments,
 manufacturing and trade sales, inventories to sales ratio, consumer
 installment credit to income ratio, and change of labor cost per unit of
 output were based on estimates.  In addition, the personal consumption
 expenditure deflator for money supply and commercial and industrial loans
 outstanding were also based on an estimate.
 
                                     NOTICE
 
      The next release is scheduled for May 17, 2001 at 10:00 A.M.
 
     ABOUT THE CONFERENCE BOARD -- The Conference Board is a worldwide research
 and business membership group, with more than 2,700 corporate and other
 members in 60 nations.  One of the leading private sources of economic and
 business intelligence, The Conference Board is a not-for-profit, non-advocacy
 organization.
     In December 1995, the Conference Board assumed responsibility for
 computing the composite indexes from the U.S. Department of Commerce, which is
 in keeping with its mission to improve the business enterprise system and to
 enhance the contribution of business to society.
 
                       Summary Table of Composite Indexes
 
                             2000          2001           6-month
                              Jan      Feb      Mar     Sep. to Mar.
 
 
     Leading index           109.0    108.8    108.5 p
       Percent Change           .5      -.2      -.3 p      -1.2
       Diffusion              60.0     40.0     40.0        30.0
 
     Coincident Index        116.4    116.5    116.6 p
       Percent Change           .0       .1       .1 p       0.0
       Diffusion              25.0     75.0     75.0        62.5
 
     Lagging Index           107.6 r  107.3 r  106.9 p
       Percent Change           .0 r    -.3 r    -.4 p       0.1
       Diffusion              35.7     35.7     28.6        57.1
 
     p  Preliminary     r  Revised
     Indexes equal 100 in 1996
 
 SOURCE  The Conference Board