Global Leading Indicators

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.

New York, February 15, 2024…The Conference Board Leading Economic Index^® (LEI) for Australia, increased by 0.3 percent in December 2023 to 114.4 (2016=100), after being unchanged in November. Despite this improvement, the LEI fell by 1.3 percent in the second half of 2023, a significantly smaller rate of decline than the contraction of 3.0 percent over the first half of the same year.

The Conference Board Coincident Economic Index^® (CEI) for Australia decreased by 0.2 percent in December 2023 to 115.4 (2016=100), partially reversing a 0.4 percent increase in November. The CEI grew by 0.8 percent in the second half of 2023, the same gain as in the first half of last year.

“The LEI for Australia improved slightly in December, after being on the downward trajectory for over a year,” said Ian Hu, Economic Research Associate at The Conference Board. “Positive contributions from most components more than offset the negative contributions from building approvals and the yield spread. Despite the most recent improvement, the six-month and annual growth rates of the LEI still read negative and suggest persisting headwinds to growth going forward. As a result, The Conference Board currently expects Australia’s real GDP growth to slow to 1.0 percent in 2024, after 2.0 percent in 2023.”

The LEI for Australia increased slightly in December

The majority of components contributed positively to the LEI

The six-month growth rate of the Australia LEI remains strongly negative and suggests continued obstacles to economic

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 -2.9 percent. The red dotted line is drawn at the threshold value (measured by the median, -2.9 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

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