What is Composite Index of Coincident Indicators

The Composite Index of Coincident Indicators is an index published by the Conference Board that is a broad-based measurement of current economic conditions, helping economists and investors to determine which phase of the business cycle the economy is currently experiencing.

BREAKING DOWN Composite Index of Coincident Indicators

The Composite Index of Coincident Indicators comprises four cyclical economic data sets: 

1. The number of employees on non-agricultural payrolls, as released by the Bureau of Labor Statistics. This statistic is often commonly referred to as “payroll employment.” It counts both full-time and part-time workers, whether they may be permanent or temporary. Economists view this evaluation of net hiring and termination of a large segment of the industries representing the labor view as a critical look at the health of the economy.
2. The Index of Industrial Production, which includes the output of industrial production across a number of major markets, including manufacturing, utilities and mining.  
3. The level of manufacturing and trade sales. Economists rely on these figures, which are adjusted for inflation, to provide a true representation of actual spending. These statistics are pulled from National Income and Product Account calculations. An important distinction of the figures used for those calculations is that some listings are counted more than once, which is why this total figure is generally higher than the GDP.

4. The aggregate amount of personal income excluding transfer payments. Economists use this figure to determine how much people are actually earning. This figure is adjusted for inflation and covers income received from most earned sources of income. It excludes income received from Social Security payouts and some other government programs. Economists watch these numbers closely because the figures tell you how much money people are receiving, which in turn can determine how much they have available to spend. When people have more income with which to buy products and services, the economy as a whole tends to benefit and go in a more positive direction

The Composite Index of Coincident Indicators and other indexes

Investors of all kinds commonly use The Composite Index of Coincident Indicators to judge the economy's current position in the business cycle. This index is often used also as a confirmation tool in conjunction with the Composite Index of Leading Indicators. The Conference Board also produces the Composite Index of Lagging Indicators. By looking at this trio of indexes as a whole, investors and analysts can get a more comprehensive picture of the overall economy and the state of its health.