Since March, the leading index has declined by 0.9 percent (about a -1.8 percent annual growth rate), well below the 0.1 percent decline (about a -0.3 percent annual growth rate) between September 2007 and March 2008. In addition, the weaknesses among the coincident indicators have remained very widespread in recent months.
The coincident index remained unchanged in September as a decline in industrial production excluding construction offset increases in final household consumption, real imports and employment, and retails sales remained unchanged. From March to September, the coincident index fell by 0.8 percent (a -1.5 percent annual rate), down sharply from the 0.2 percent increase (about a 0.4 percent annual rate) during the previous six months from September 2007 to March 2008. However, the strengths among the coincident indicators have become somewhat more widespread than the weaknesses in recent months. Real GDP growth has slowed to a 1.0 percent average annual growth rate during the first half of 2008 (including a 0.6 percent annual rate during the second quarter), down from a 2.5 percent average annual rate during the second half of 2007.
The leading index resumed its downward trend this month, and the index has now declined by 2.0 percent from its most recent high in February 2008, its largest decrease since 1992. Similarly, the coincident index has also been on a general downward trend since February 2008. Taken together, the recent behavior of the composite indexes suggests that the risks for further economic weakness in the near term remain elevated.
LEADING INDICATORS
Two of the six components that make up the leading index increased in September. The positive contributors - in order from the largest positive contributor to the smallest - are the capital equipment component of industrial production, and job placings. The negative contributors - in order from the largest negative contributor to the smallest - are order books survey, the Spanish equity price index, the Spanish contribution to Euro M2, and the inverted long-term government bond yield.
With the decrease of 0.2 percent in September, the leading index now stands at 155.7 (1990=100). Based on revised data, this index increased 0.6 percent in August and declined 0.3 percent in July. During the six-month span through September, the index decreased 0.9 percent, and two of the six components advanced (diffusion index, six-month span equals 33.3 percent).
COINCIDENT INDICATORS
Three of the five components that make up the coincident index increased in September. The positive contributors - in order from the largest positive contributor to the smallest - are final household consumption, employment, and real imports. Industrial production excluding construction declined in September, while retail sales remained unchanged.
After remaining unchanged in September, the coincident index now stands at 157.2 (1990=100). Based on revised data, this index decreased 0.2 percent in August and remained unchanged in July. During the six-month span through September, the index decreased -0.8 percent, and three of the five components advanced (diffusion index, six-month span equals 60.0 percent).
