Diffusion indexes revised upward

February marks 12 straight months over boom-or-bust line

The Economic Planning Agency announced Thursday that it has revised upward February’s diffusion indexes, used to indicate future economic trends and confirm the state of the economy in the past.

The diffusion index of leading economic indicators was moved up to 77.8 percent from the 71.4 percent logged in a preliminary report released April 5. The diffusion index of lagging indicators was raised to 42.9 percent from 33.3 percent.

The February diffusion index of leading indexes logged a figure above the boom-or-bust line of 50 percent for the 12th consecutive month.

A reading above 50 percent is considered to indicate an economic expansion in the future, while a figure below that level is taken as an indication of an upcoming economic shrinkage.

The agency left the diffusion index of coincident indicators unchanged at 100 percent. The coincident index gauges the current state of the economy.

To compile each diffusion index, the agency compares a set of component indexes for a given month with the readings of the same indexes logged three months earlier.

Each diffusion index is then computed as a percentage of indexes showing improvement to the total of its component indexes.

The agency revised upward the leading diffusion index for February as the index for raw material inventories at manufacturers and new orders for machinery showed improvements from the numbers three months earlier. Both figures were unavailable for preliminary data.

The lagging diffusion index for February was also raised due to a shrinkage in manufacturers’ material inventories.