The Conference Board announced today that the leading index for Korea decreased 0.1 percent and the coincident index increased 0.5 percent in January.

• The leading index declined slightly in January following a large increase in December, and there were significant upward revisions to the last several months. As a result, the leading index has increased at a 6.0 percent annual rate from its recent low in March 2003, although it continues to be volatile from month to month because of fluctuations in building permits and the inventory to shipment ratio. Despite January's small decline, the growth rate of the leading index has actually strengthened somewhat in recent months and this strength has been widespread.
• January's increase keeps the coincident index on an upward trend from the most recent low in July 2003. In addition, real GDP growth picked up to a 3.5 percent annual rate in the third quarter of 2003 following small declines in the first half of the year. The recent strength in the leading index is signaling some further improvement in the rate of economic growth through the first half of 2004.

LEADING INDICATORS. Four of the eight components that make up the leading index increased in January. The positive contributors - from the largest positive contributor to the smallest - were value of machinery orders, stock prices, real exports FOB, and letter of credit arrivals*. Four of the eight components that make up the leading index decreased in January. The negative contributors - from the largest negative contributor to the smallest -were the (inverted) index of inventories to shipments, authorized building permits, monthly hours worked*, and the (inverted) yield of government public bonds.

With the 0.1 percent decrease in January, the leading index now stands at 121.6 (1990=100). Based on revised data, this index increased 1.4 percent in December and decreased 0.1 percent in November. During the six-month span through January, the index increased 2.5 percent, with six of its eight components advancing (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS. All four components that make up the coincident index increased in January. The positive contributors - from the largest positive contributor to the smallest - were total employment, the (inverted) unemployment rate, wholesale and retail sales, and industrial production.

With the 0.5 percent increase in January, the coincident index now stands at 112.1 (1990=100). This index increased 0.3 percent in December and increased 0.1 percent in November. During the six-month span through January, the coincident index increased 1.3 percent, with all four components advancing (diffusion index, six-month span equals 100.0 percent).

DATA AVAILABILITY. The data series used to compute the two composite indexes reported in this release are those available "as of" 10 A.M. (ET) on March 12, 2004.

Notes: The series in the leading index based on The Conference Board's estimates are monthly hours worked, and letter of credit arrivals in manufacturing. There is no forecasted series in the coincident index.

Professional Contacts at The Conference Board:
Indicator Program: 1-212-339-0336

Media Contacts:
Randy Poe: 1-212-339-0234
Frank Tortorici: 1-212-339-0231

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 eight individual leading or coincident indicators. (See page 6 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.

Korea Composite Indexes: Components and Standardization Factors

	Leading Index	Factor
1.	Stock Prices	0.0447
2.	Hours Worked	0.2146
3.	Value of Machinery Orders	0.0253
4.	Letter of Credit Arrivals	0.0761
5.	Index of Shipments to Inventories	0.0731
6.	Export FOB	0.0836
7.	Yield of Government Public Bonds	0.4546
8.	Authorized Building Permits	0.0279
	Coincident Index
1.	Industrial Production	0.0428
2.	Wholesale and Retail Trade	0.0534
3.	Employment	0.1966
4.	Unemployment Rate	0.7072

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. These factors were last revised effective with the January 29, 2002 release, and all historical values for the two composite indexes were revised at that time to reflect the changes. (Under normal circumstances, updates to the leading and coincident indexes only incorporate revisions to data over the past six months.)

The factors above for the leading index were calculated using 1993-1999 as the sample period for measuring volatility. A separate set of factors for the 1982-1993, 1980 - 1982, 1975 - 1980 and 1972-1975 periods, are available upon request. The factors above for the coincident index were calculated using 1995-1999 and 1970-1995 as the sample periods. These multiple sample periods are 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 bond yields and stock prices that are available sooner than other data on real aspects of the economy such as monthly hours worked. 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 2004 schedule for the Korea "Leading Economic Indicators" press release is:

February 2004 Data.......... Monday, April 12, 2004
March 2004 Data.......... Monday, May 10, 2004
April 2004 Data.......... Monday, June 14, 2004

All releases are at 9:00 P.M. ET and 10:00 A.M. GMT+9 (following Day)

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 Customer Service at 212-339-0345, or email indicators@conference-board.org.

AVAILABLE FROM THE CONFERENCE BOARD

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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.