The leading index posted a robust 2.2 percent increase from July 2001to January 2002; the fourth consecutive month that the six-month leading index growth rate has improved. The six-month diffusion index, which measures the number of components that are rising, increased above 50 percent for the first time in 21 months. With a robust leading index, the coincident index appears to be bottoming out in the past two months, The Conference Board (TCB) reports.
According to TCB, the rate of decline of nonagricultural payrolls and industrial production slowed in the last three and four months, respectively, while personal income and manufacturing sales have essentially held their ground throughout the recession. The coincident-to-lagging ratio, which has historically led business cycles, is up for the fourth consecutive month in January, which underscores the strength of the leading index and indicates a likely economic recovery, barring any unexpected negative events.
Six of the 10 indicators that make up the leading index increased in January. The positive contributors to the leading index--from the largest positive contributor to the smallest--were vendor performance, index of consumer expectations, average weekly initial claims for unemployment insurance (inverted), building permits, money supply and interest rate spread.
During the six-month span through January, the leading index increased 2.2 percent, with six of the 10 components advancing (diffusion index, six-month span equals 60 percent).
Holding steady in January, the coincident index now stands at 115.4 (1996=100). Based on revised data, this index increased 0.1 percent in December and decreased 0.3 percent in November. During the six-month period through January, the coincident index decreased 0.7 percent. The lagging index decreased 0.2 percent to 102.6 (1996=100) in January.
The Conference Board (TCB) is a not-for-profit organization and holds 501 (c) (3) tax-exempt status in the U.S. It creates and disseminates knowledge about management and the marketplace to help businesses strengthen their performance and better serve society. Working as a global, independent membership organization in the public interest, TCB conducts research, convene conferences, make forecasts, assess trends, publish information and analysis, and bring executives together to learn from one another.