RP on steady course, key indicators suggest

MANILA, Philippines—The composite leading economic indicators (LEI)—a broad barometer used to gauge the economy’s health—continued to improve in the third quarter but at a slower pace, the National Statistical Coordination Board said.

The decline in the composite LEI—composed of 11 indexes including inflation—eased in the third quarter to -0.037 point, from a revised -0.09 in the second quarter, NSCB data showed.

However, such improvement is “not as remarkable as in the first two quarters of the year,” said Romulo A. Virola, NSCB secretary general.

The composite LEI has 11 components: Total merchandise imports, consumer price index, wholesale price index, tourist arrivals, stock price index, electric energy consumption, hotel occupancy rate, money supply, number of new businesses, terms of trade index, and foreign exchange rate.

Virola said that of the 11 indexes, nine contributed positively to the composite LEI in the third quarter.

Virola said the share of these nine positive contributors quarter account for 68.3 percent of the composite LEI.

That share dropped from 100 percent in the second quarter.

The top positive contributor is the consumer price index, benefiting from low inflation observed during the quarter ending in September.

The second biggest positive contributor is money supply—the total amount of money available in an economy in a given period. It was driven by growth of 11.4 percent year-on-year.

On the other hand, the top negative contributor is the number of new businesses, pushed down by an 8.2-percent decline.

As of end-June, new enterprises numbered 2,725 compared to 2,967 a year earlier.

The second-biggest negative contributor is the wholesale price index, which suffered a reversal after contributing positively in three previous quarters.

Virola said that the slower growth of WPI in the second quarter signaled that the cycle of this index for the third quarter 2010 is on its way down. –Ronnel Domingo, Philippine Daily Inquirer