FOR WIRE TRANSMISSION: 8:30 A.M. EDT, TUESDAY, OCTOBER 1, 1996 COMPOSITE INDEXES OF LEADING, COINCIDENT, AND LAGGING INDICATORS: AUGUST 1996 The composite index of leading indicators increased 0.2 percent in August to 103.3 (1987 equals 100), another historic high, according to preliminary estimates prepared by The Conference Board. The index increased 0.2 percent in July and increased 0.5 percent in June. Over the six months from February to August 1996, the index increased 1.7 percent. During the six-month period through August nine of eleven leading economic indicators advanced (diffusion index, six-month span equals 81.8 percent). The Conference Board's calculations show that seven of the eleven leading economic indicators rose in August. The most significant increases--in order from the largest positive contributor to the smallest--are change in sensitive materials prices, stock prices, average weekly initial claims for state unemployment insurance, and vendor performance (slower deliveries diffusion index). The most significant negative contributors to the composite leading index in August are change in manufacturers' unfilled orders for durable goods and contracts and orders for plant and equipment. The composite index of coincident indicators increased 0.4 percent in August to 121.8 (1987 equals 100). All three of the available components--employees on nonagricultural payrolls, industrial production, and personal income less transfer payments --increased. Data on manufacturing and trade sales in August are not yet available. Based on revised data, the coincident index increased 0.2 percent in July and increased 0.4 percent in June. Over the six months from February to August, the index increased 1.8 percent. The composite index of lagging indicators increased 0.1 percent in August to 102.6 (1987 equals 100). Based on revised data, the lagging index increased 0.3 percent in July and decreased 0.2 percent in June. NOTICE:. The next release of the leading index is scheduled for Friday, November 1 at 8:30 A.M. -2- * * * The composite indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. 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. The cyclical turning points in the lagging index generally have occurred after 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. For more information on these indexes, see the following articles in the U.S. Department of Commerce's (Bureau of Economic Analysis division) Survey of Current Business: "Business Cycle Indicators: Upcoming Revision of the Composite Indexes" (October 1993) and "The Composite Index of Coincident Indicators and Alternative Coincident Indexes" (June 1992). The factors that are used to compute the indexes are provided on page 3 of this news release. The Conference Board is publishing a new monthly report, Business Cycle Indicators that is patterned after a similarly titled, discontinued section of the Survey of Current Business. It contains the composite indexes, their components, and related economic series. See the notice box on page 4 for further information on the distribution of this report and the corresponding data. REVISIONS POLICY: The current procedure for calculating the leading, coincident, and lagging indexes only incorporates revisions to data over the past six months. Comprehensive or long-history revisions, which account for changes in the components that fall outside the moving, six-month window, normally have been made in the later part of each year. Recent large revisions to series such as personal income and the switch to chain-weighted deflators in the National Income and Product Accounts will have significant effects on the history of the indexes. We plan to fully update the three indexes in 1996.