iled by the Conference Board and published in its monthly Business Cycle Indicators report. Released to public at 10:00 am ET four to five weeks after the end of the record month. www.conference-board.org has historical data and explanations of the methodology behind the indices.

Because the indices’ components are all released earlier than the indices themselves, the markets generally don’t react strongly to the indicator report.

Coincident Index

Four Components:
1. Nonfarm Payrolls: obtained from a survey of about 160,000 businesses, conducted by the Bureau of Labor Statistics.
2. Personal Income Less Transfer Payments: Derived from the Personal Income and Outlays report, produced by the Bureau of Economic Analysis (BEA). The largest source is wages and salaries, transfer payments – government disbursements and food stamps.
3. Total Industrial Production Index: published by the Federal Reserve and constructed of 295 components that are weighted according to the value they add during the production process.
4. Manufacturing & Retail Trade Sales: Collected as part of the National Income and Product Accounts calculations. Found in the Manufacturing and Trade Inventories and Sales (MTIS) report published by the Department of Commerce.

Leading Economic Index

Ten Components:
1. Average weekly hours worked in manufacturing
2. Average weekly initial claims for unemployment insurance
3. Manufacturers’ new orders for consumer goods and materials
4. Slower deliveries diffusion index of vendor performance
5. Manufacturers’ new orders for nondefense capital goods
6. Monthly building permits for new private housing
7. Stock prices, 500 common stocks
8. The M2 money supply (in 1996 dollars)
9. The interest rate spread between the 10-year Treasury bond and the federal funds rate
10. The Index of Consumer Expectations

The individual indicators composing the Leading Economic Index differ considerably in their abilities to predict economic turning points. Some are very far seeing, others relatively near sighted. The composite index combines in such a way that the whole is designed to outperform any of its parts.

Lagging Economic Index

Seven Components:
1. Average duration of unemployment
2. Ratio of manufacturing and trade inventories to sales
3. Manufacturing labor cost per unit of output
4. Average prime rate
5. Commercial and industrial loans outstanding
6. Ratio of consumer installment credit to personal income
7. Change in the consumer price index for services

The Lagging Economic Index follows downturns in the business cycles by about three months and expansions by about fifteen. This index was designed to confirm turning points in economic activity that were identified by the leading and coincident indices have actually occurred, thus preventing the transmission of false signals