The Conference Board announced that the leading index for Australia declined 0.5 percent and the coincident index increased 0.2 percent in October.

The leading index decreased for the second consecutive month in October. Share prices, building approvals, and the yield spread continued to make negative contributions to the index this month, more than offsetting the large increases in rural goods exports and money supply. Index levels were revised moderately lower from May to September as new data for the sales-to-inventories ratio and gross operating surplus for the third quarter of 2008 became available. The six-month change in the leading index has continued to fall, dipping to 0.2 percent (a 0.4 percent annual rate) in the period through October, down from 1.6 percent (a 3.3 percent annual rate) between October 2007 and April 2008. In addition, the strengths among the leading indicators have been roughly balanced with the weaknesses over the past six months.

The coincident index increased again in October, and the strengths among its components have remained fairly widespread. Index levels were revised slightly upwards for the past several months as new quarterly data for household gross disposable income became available. Since April, the coincident index has risen 1.2 percent (a 2.4 percent annual rate), modestly faster than the increase of 0.9 percent (a 1.8 percent annual rate) during the previous six months. Meanwhile, real GDP growth slowed to a 0.3 percent annual rate in the third quarter, down sharply from the 1.9 percent average annual rate of growth in the first half of 2008.

The leading index has weakened this year, with its growth essentially stalling since the summer and declining over the past two months. The coincident index, a measure of current economic conditions, remains on a rising trend that began in early 2006. The continued weakening in the leading index suggests that slow economic growth will continue in the near term.

LEADING INDICATORS

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

With the 0.5 percent decrease in October, the leading index now stands at 188.3 (1990=100). Based on revised data, this index declined 0.4 percent in September and increased 0.4 percent in August. During the six-month period through October, the leading index increased 0.2 percent, and three of the seven components increased (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS

Two of the four components in the coincident index increased in October. The increases - in order from the larger positive contributor to the smaller - occurred in employed persons and household gross disposable income. Retail trade and industrial production declined in October.

With the increase of 0.2 percent in October, the coincident index now stands at 146.9 (1990=100). Based on revised data, this index increased 0.1 percent in September and increased 0.3 percent in August. During the six-month period through October, the coincident index increased 1.2 percent, with three of the four components in the series making positive contributions (diffusion index, six-month span equals 75.0 percent).