The Conference Board

FOR RELEASE: 8:00 P.M. ET, MONDAY, OCTOBER 21, 2002

AUSTRALIA COMPOSITE INDEXES FOR AUGUST 2002

The Conference Board reports today that the leading index for Australia increased 0.8 percent, and the coincident index increased 0.4 percent in August.

LEADING INDICATORS. Seven of the eight components of the leading index increased in August. The positive contributors to the index -in order from the largest positive contributor to the smallest- are building approvals*, real money supply*, sales to inventory ratio*, inverted medium term bond yield*, exports of rural goods*, stock prices, and gross operating surplus*. The yield spread was the only component that declined in August.

With the increase of 0.8 percent in August, the leading index now stands at 145.3 (1990=100). Based on revised data, this index decreased 0.2 percent in July and decreased 0.3 percent in June. During the six-month span through August, the leading index increased 0.4 percent, and three of the eight components increased (diffusion index, six-month span equals 43.8 percent).

COINCIDENT INDICATORS. Four of the five components of the coincident index increased in August. The increases - in order from the largest positive contributor to the smallest - occurred in number of employed persons, retail trade*, household disposable income*, and industrial production*. The inverted unemployment rate remained unchanged.

With the increase of 0.4 percent in August, the coincident index now stands at 113.3 (1990=100). Based on revised data, this index remained unchanged in July and increased 0.1 percent in June. During the six-month period through August, the coincident index increased 0.9 percent, with all five series making positive contributions (diffusion index, six-month span equals 100 percent).

The next release is scheduled for November 20, 2002 at 8:00 P.M. (ET)
In Australia -November 21, 2002 at 10:00 A.M. (AEDT)

DATA AVAILABILITY. The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on October 18, 2002. Some series are estimated as noted below.

NOTES: Series in the leading index that are based on The Conference Board estimates are sales to inventory ratio and gross operating surplus for private non-financial corporations, the implicit price index used to deflate rural goods exports and building approvals, the CPI used to deflate money supply. (Money Supply M3 levels from April 2002 and on are derived from growth rates reported by RBA). Series in the coincident index that are based on The Conference Board estimates are the CPI used to deflate retail trade, industrial production and household disposable income.

Due to Reserve Bank of Australia's discontinuation of the 3-month Treasury Bill (for details see 'For the Record" in June 2002 RBA bulletin). The Conference Board will use the Bank Accepted Bill 90 Days to calculate the yield spread from now on.

Professional Contacts at The Conference Board:
Mike Fort: 1-212-339-0402
Ataman Ozyildirim: 1-212-339-0399
Bart Van Ark: 31-50-363-3674

Media Contacts:
Randy Poe: 1-212-339-0234
Frank Tortorici: 1-212-339-0231
Sandra Lester: 32-2-675-5405

THE CYCLICAL INDICATOR APPROACH. The composite indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading and coincident indexes are essentially composite averages of between four and ten individual leading or coincident indicators. (See page 3 for details.) They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component-primarily because they smooth out some of the volatility of individual components.

Historically, the cyclical turning points in the leading index have occurred before those in aggregate economic activity, while the cyclical turning points in the coincident index have occurred at about the same time as those in aggregate economic activity.

A change in direction in a composite index does not signal a cyclical turning point unless the movement is of significant size, duration, and scope. Historical analysis with U.S. data shows recession warnings are best determined by looking for negative growth of about 3.5 percent (annualized rate), coupled with declines in at least half of the components over a six-month span. Further explanations of the cyclical indicator approach and the composite index methodology appear in The Conference Board's Business Cycle Indicators report and Web site:www.globalindicators.org.

Australia Composite Indexes: Components and Standardization Factors

	Leading Index	Factor
1.	Medium Term Government Bond Yield	.0302
2.	Yield Spread, 10 year minus 90 day	.3507
3.	Share Prices, All Ordinaries	.0279
4.	Money Supply, M3	.2215
5.	Rural Goods Exports	.0176
6.	Sales to Inventory Ratio	.2229
7.	Gross Operating Surplus, Private Non-Financial Corporations	.0915
8.	Building Approvals	.0376

Coincident Index

1.	Retail Trade	.0822
2.	Unemployment Rate	.4612
3.	Industrial Production	.0468
4.	Employed Persons	.2828
5.	Household Disposable Income	.1270

Notes:
The component factors are inversely related to the standard deviation of the month-to-month changes in each component. They are used to equalize the volatility of the contribution from each component and are "normalized" to sum to 1. These factors were revised effective with June 19, 2001 release, and all historical values for the two composite indexes have been revised at the time to reflect the changes. (Under normal circumstances, updates to the leading and coincident indexes only incorporate revisions to data over the past six months.)

The factors above were calculated using 1977-1999 as the sample period for measuring volatility for the leading index, and 1959-1999 as the sample period for the coincident index. There are additional sample periods as the result of different starting dates for the component data. When one or more components is missing, the other factors are adjusted proportionately to ensure that the total continues to sum to 1. For additional information on the standardization factors and the index methodology visit our Web site: www.globalindicators.org.

To address the problem of lags in available data, those leading and coincident indicators that are not available at the time of publication are estimated using statistical imputation. An autoregressive model is used to estimate each component. The resulting indexes are constructed using real and estimated data, and will be revised as the data unavailable at the time of publication become available. Such revisions are part of the monthly data revisions, now a regular part of the U.S. Business Cycle Indicators program. The main advantage of this procedure is to utilize in the leading index the data, such as stock prices, that are available sooner than other data on "real" aspects of the economy, such as new orders and changes in inventory. Empirical research by The Conference Board suggests there are real gains in adopting this procedure to make all the indicator series as up-to-date as possible.

The schedule for 2001-2002 for the "Leading Economic Indicators" news release is:

September 2002 data... Wednesday November 20, 2002
October 2002 data... Thursday December 19, 2002

For detailed information on benchmark revisions, visit our website: www.globalindicators.org

ABOUT THE CONFERENCE BOARD. Founded in 1916, The Conference Board is the premier business membership and research network. The Conference Board has become a global leader in helping executives build strong professional relationships, expand their business knowledge and find solutions to a wide range of business challenges. The Board's Economics Program, under the direction of Chief Economist Gail Fosler, is a recognized source of forecasts, economic analysis and objective indicators such as the Leading Economic Indicators and the Consumer Confidence Index.

This role is part of a long tradition of research and education that stretches back to the compilation of the first continuous measure of the cost of living in the United States in 1919. In 1995, The Conference Board assumed responsibility for computing the composite indexes from the U.S. Department of Commerce. The Conference Board now produces business cycle indexes for the U.S., Australia, France, Germany, Korea, Japan, Mexico, Spain and the U.K. To subscribe to any of these indexes, please visit www.globalindicators.org , contact the Global Indicators Research Institute at 212-339-0330, or email indicators@conference-board.org.

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