Global Leading Indicators

This month’s release of the composite economic indexes incorporates annual benchmark revisions which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

For more information, please visit https://www.conference-board.org/topics/business-cycle-indicators/ or contact us at indicators@conference-board.org.

The Conference Board Leading Economic Index^®(LEI) for Mexico increased by 0.5 percent in November 2022 to 111.3 (2016=100), following a 0.7 percent increase in October. However, the LEI contracted by 2.5 percent in the six-month period from May to November 2022, a reversal from the 1.0 percent growth in the six-month period from November 2021 to May 2022.

The Conference Board Coincident Economic Index^® (CEI) for Mexico increased by 0.1 percent in November 2022 to 110.0 (2016=100), after a 0.1 percent increase in October. The CEI grew by 1.0 percent in the six-month period from May to November 2022, slower than the 2.6 percent improvement over the previous six-month period.

“The LEI for Mexico increased again in November, after several months of declines,” said Casey Cloutier, Economic Research Analyst at The Conference Board. “The increase was led by large positive contributions from real exchange rates, stock prices, and construction activity. However, continued supply chain bottlenecks and a potential recession in the US may weigh on economic growth for Mexico. The Conference Board forecasts the year-over-year GDP growth rate to slow from 2.9 in 2022 to 1.0 percent in 2023.”

Real exchange rates, stock prices, and construction activity drove the November increase

Despite improvements, the LEI continues to signal a recession in the near-term

Note: The chart illustrates the so-called 3D’s rule which is a reliable rule of thumb to interpret the duration, depth, and diffusion – the 3D’s – of a downward movement in the LEI. Duration refers to how long-lasting a decline in the index is, and depth denotes how large the decline is. Duration and depth are measured by the rate of change of the index over the last six months. Diffusion is a measure of how widespread the decline is (i.e., the diffusion index of the LEI ranges from 0 to 100 and numbers below 50 indicate most of the components are weakening). The 3D’s rule provides signals of impending recessions 1) when the diffusion index falls below the threshold of 50 (denoted by the black dotted line in the chart), and simultaneously 2) when the decline in the index over the most recent six months falls below the threshold of -3.0 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.0 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

The composite business cycle indexes pre- and post- benchmark revisions: 1980-present  

About The Conference Board Leading Economic Index^® (LEI) for Mexico: The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by 5 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle.

The six components of The Conference Board Leading Economic Index^® for Mexico include: Industrial Production (Construction), Stock Prices, U.S. Refiners’ Acquisition Cost of Domestic and Imported Crude Oil, Manufacturing Inventories (Opinion Balance), Federal Funds Rate, and Real Exchange Rate.

To access data, please visit: https://data-central.conference-board.org/    

About The Conference Board

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