The Conference Board Leading Economic Index® (LEI) for Australia declined 0.2 percent and The Conference Board Coincident Economic Index® (CEI) increased 0.4 percent in January.

The Conference Board LEI for Australia declined slightly in January — the first decrease in eight months. There were large upward revisions to the index from August to November 2009 as actual data for the sales-to-inventories ratio and gross operating surplus for the fourth quarter of 2009 became available. In January, substantial drops in stock prices and building approvals more than offset positive contributions from the yield spread and rural goods exports. Despite the decline in January, the leading economic index increased by 2.7 percent (about a 5.5 percent annual rate) in the six-month period through January 2010, an improvement from the 0.5 percent growth (about a 1.1 percent annual rate) in the previous six months. The strengths and weaknesses among the leading indicators have been largely balanced in recent months.

The Conference Board CEI for Australia, a measure of current economic activity, continued to increase in January. The strengths among the coincident indicators were very widespread, as all components advanced this month. With this month's gain, the six-month growth rate of the coincident economic index continued to pick up, to 1.1 percent (about a 2.1 percent annual rate) in the period through January, from the 0.8 percent increase (about a 1.6 percent annual rate) during the previous six months. At the same time, real GDP increased at a 3.7 percent annual rate during the last quarter of 2009, an improvement from the gains of 1.1 percent annual rate in the third quarter and the 3.0 percent average annual rate for the first half of the year.

The Conference Board LEI for Australia declined in January for the first time in eight months, and its six-month growth rate has moderated somewhat lately. Meanwhile, The Conference Board CEI for Australia has been on a modest rising trend since mid-2009. Taken together, the current behavior of the composite indexes suggests that the economy will continue to expand, but perhaps at a modest pace in the near term.

LEADING INDICATORS

Four of the seven components in The Conference Board LEI for Australia increased in January. The positive contributors to the index - in order from the largest positive contributor to the smallest - are the yield spread, rural goods exports, gross operating surplus, and real money supply. Share prices, building approvals, and the sales-to-inventories ratio declined in January.

With the 0.2 percent decrease in January, The Conference Board LEI for Australia now stands at 113.7 (2004=100). Based on revised data, this index increased 0.6 percent in December and increased 0.1 percent in November. During the six-month period through January, the leading economic index increased 2.7 percent, and four of the seven components increased (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS

All four components in The Conference Board CEI for Australia increased in January. The increases - in order from the largest positive contributor to the smallest - occurred in employed persons, retail trade, industrial production, and household gross disposable income.

With the increase of 0.4 percent in January, The Conference Board CEI for Australia now stands at 115.1 (2004=100). Based on revised data, this index increased 0.3 percent in December and increased 0.4 percent in November. During the six-month period through January, the coincident economic index increased 1.1 percent, with three of the four components in the series making positive contributions (diffusion index, six-month span equals 62.5 percent).