Press Release
LEI for Australia Decreased in April
2024-06-18
About the Leading Economic Index and the Coincident Economic Index:
The Leading Economic Index provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The Coincident Economic Index provides an indication of the current state of the economy. Additional details are below.
The Conference Board Leading Economic Index® (LEI) for Australia decreased by 0.3 percent in April 2024 to 113.6 (2016=100), following a 0.3 percent decrease in March (according to revised data). Overall, the LEI fell by 1.2 percent from October 2023 to April 2024, a slower rate of contraction than the -1.6 percent decline over the previous six months.
The Conference Board Coincident Economic Index® (CEI) for Australia inched down by 0.1 percent in April 2024 to 115.2 (2016=100), after rising by 0.5 percent in March. Overall, the CEI grew by 0.5 percent from October 2023 to April 2024, after increasing by 0.4 percent over the previous six months.
“The LEI for Australia decreased in April for the 5th consecutive month,” said Ian Hu, Economic Research Associate at The Conference Board. “Negative contributions from share prices and building approvals outweighed the positive contributions from the money supply and gross operating surplus. In addition, on a six-month basis, the growth rate of the LEI has become more negative, and the index is also declining on a year-over-year basis. The LEI hence suggests headwinds to growth in the near future, after a subdued first quarter during which real GDP grew by only 0.1 percent (quarter-on-quarter, not annualized). The Conference Board currently projects Australia’s real GDP growth to reach 1.3 percent in 2024 after 2% in 2023.”
The Australia LEI fell in April
The majority of components contributed negatively to the LEI in April
Although outside of recession signal territory, the six-month growth rate of the Australia LEI inched closer to the warning signal threshold in April
NOTE: The chart illustrates the so-called 3Ds—duration, depth, and diffusion—for interpreting a downward movement in the LEI. Duration refers to how long the decline has lasted. Depth denotes the size of decline. Duration and depth are measured by the rate of change of the index over the most recent six months. Diffusion is a measure of how widespread the decline is among the LEI’s component indicators—on a scale of 0 to 100, a six-month diffusion index reading below 50 indicates most components are weakening.
The 3Ds rule signals an impending recession when: 1) the six-month diffusion index lies below 50, shown by the black warning signal lines in the chart; and 2) the LEI’s six-month rate of decline falls below the threshold of −2.9 percent. The red recession signal lines indicate months when both criteria are met simultaneously—and thus that a recession is likely imminent or underway.
About The Conference Board Leading Economic Index® (LEI) for Australia
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 approximately 7 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 seven components of The Conference Board Leading Economic Index® for Australia include: Yield Spread, Share Prices, M3 Money Supply, Building Approvals, Rural Goods Exports, Sales to Inventories Ratio, and Gross Operating Surplus.
To access data, please visit: https://data-central.conference-board.org/
About The Conference Board
The Conference Board is the member-driven think tank that delivers Trusted Insights for What’s Ahead™. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. ConferenceBoard.org
THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.
