Following the movement from the previous quarter, the composite leading economic indicators (LEI) for the fourth quarter of 2003 continued to slip to negative 0.181 from negative 0.113 during the third quarter of 2003 (Table 1 and Figure 1). The after effects of the July 27 mutiny and the political rumbles could have contributed to the downward movement of the composite leading economic indicators in the fourth quarter. Table 1 below presents the composite LEI for the period 1999 to 2003, while Figure 1 shows the movement of the indicators vis-à-vis the cycle component of the non-agriculture Gross Domestic product (GDP).

Table 1: Composite Leading Economic Indicator (LEI),
First Quarter 1999 to Fourth Quarter of 2003

Figure 1. Cycle Component of Non-Agriculture GDP versus Leading Economic Composite Indicator, Third Quarter 1983 to Fourth Quarter 2003

Six (6) of the eleven (11) indicators comprising the index contributed to the slight decline during the quarter. These include imports, wholesale price index, exchange rate, tourist arrivals, new business incorporations and stock price index. On the other hand, five (5) indicators, namely: money supply, electric energy consumption, consumer price index (CPI), hotel occupancy rate and terms of trade contributed positively to the composite LEI.

The contributions of the above eleven (11) indicators were based on two factors, namely: (1) the direction (the slope or change) of the cycle component of each of the indicators; and (2) the correlation of their cycle component with the cycle component of GDP for industry and services.

ROMULO A. VIROLA
Secretary General

Contact Persons: Regina S. Reyes and Lea H. Amoro
Tel. No.: (+6 32) 895-5002; (+6 32) 896-7981
E-mail: rs.reyes@nscb.gov.ph; lh.amoro@nscb.gov.ph