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FOR RELEASE: 9:00 A.M. ET, THURSDAY, AUGUST 15, 2002

SPAIN COMPOSITE INDEXES FOR JUNE 2002

The Press Release in a PDF file
English Version     Spanish Version

The Conference Board announced today that the leading index for Spain increased 1.3 percent and the coincident index decreased 0.1 percent in June.

  • The leading index increased sharply in June and it is now 0.2 percent above its highest value attained in January 2001. Increases in industrial orders, the construction component of industrial production, bond yield, and money supply contributed to this month's gain in the leading index.
  • Despite the strength in the leading index this month, the gain over the past six months was mainly concentrated in the construction and manufacturing sectors, as shown by the six-month diffusion index remaining well bellow 50 percent.
  • The coincident index declined this month for the first time since the beginning of this year. A sharp decrease in the retail sales coupled with a decline in industrial production contributed to this month's decline in the coincident index.

LEADING INDICATORS. Five of the seven components that make up the leading index increased in June. The positive contributors-in order from the largest positive contributor to the smallest- include the order books survey, the construction component of industrial production, the Spanish contribution to Euro M2, inverted long-term government bond yield, and job placings*. Two of the seven components of the leading index decreased in June. The negative contributors to the index occurred in the Spanish equity price index and the capital equipment component of industrial production.

With the increase of 1.3 percent in June, the leading index now stands at 151.2 (1990=100). Based on revised data, this index increased 0.9 percent in May and increased 0.5 percent in April. During the six-month span through June, the index increased 1.0 percent, and two of the seven components advanced (diffusion index, six-month span equals 28.6 percent).

COINCIDENT INDICATORS. Two of the four components that make up the coincident index increased in June. The positive contributors include final household consumption* and real imports*. The retail sales survey and industrial production excluding construction both declined in June.

With the decrease of 0.1 percent in June, the coincident index now stands at 134.7 (1990=100). Based on revised data, this index held steady in May and increased 0.3 percent in April. During the six-month span through June, the index increased 1.1 percent, and two of the four components advanced (diffusion index, six-month span equals 50.0 percent).

*See notes under data availability.

The next release is scheduled for September 17, 2002 at 9:00 A.M. (ET)
In Spain -September 17, 2002 at 3:00 P.M. (CET)

DATA AVAILABILITY. The data series used to compute the two composite indexes reported in the tables in this release are those available "as of" 6 P.M. (ET) August 13, 2002. Some series are estimated as noted below.

NOTES: Series in the coincident index based on The Conference Board estimates include final household consumption and real imports. Series in the leading index based on The Conference Board estimates is job placings.

# # #

Professional Contacts at The Conference Board:
Ataman Ozyildirim: 1-212-339-0399
Frank Tortorici: 1-212-339-0231

Media Contacts:
Randy Poe: 1-212-339-0234

Website: http://www.globalindicators.org


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 nine 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, 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.

Spain Composite Indexes: Components and Standardization Factors
 Leading IndexFactor
1.Construction Component of Industrial Production.1946
2.Capital Equipment Component of Industrial Production.0381
3.Contribution to Euro M2.3814
4.Stock Price Index.0387
5.Long term Government Bond Yield.0660
6.Order Books Survey.1842
7.Job Placings.1004

Coincident Index
1.Final Household Consumption.6215
2.Industrial Production, Excluding Construction.2477
3.Retail Sales Survey.0611
4.Real Imports.0697

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. (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 1984-2000 as the sample period for measuring volatility for the leading index and 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.


NOTICES

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

July 2002 Data............... Tuesday September 17, 2002
August 2002 Data............... Tuesday October 15, 2002
September 2002 Data............... Friday November 15, 2002
October 2002 Data............... Tuesday December 17, 2002

All releases are at 9:00 A.M (ET), 3:00 P.M. (CET)

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.

AVAILABLE FROM THE CONFERENCE BOARD

Spain Business Cycle Indicators Internet Subscription $ 500 per year (1 user)
(Includes monthly release, data, charts and commentary)
Individual Data Series $ 15 per series downloaded
Monthly BCI Report $ 130 per year
(Sample available on request)
Monthly News Release (fax or email) $ 45 per year
BCI Handbook (published 2001) $ 20
Corporate Site License $2,600 per year

Business Cycle Indicators for Australia, France, Germany, Japan, Korea, Mexico, Spain and the U.K. are available at $500 per country per year (1 user). Discounts are available to Associates of The Conference Board and accredited academic institutions.