Global Leading Indicators

The Conference Board Leading Economic Index^® (LEI) for Australia, increased by 0.2 percent in November 2023 to 114.2 (2016=100), partially reversing a decline of 0.3 percent in October. Despite the most recent improvement, the LEI fell by 1.8 percent between May and November 2023, a smaller rate of decline than the contraction of 3.2 percent over the previous six-month period, from November 2022 to May 2023.

The Conference Board Coincident Economic Index^® (CEI) for Australia increased by 0.4 percent in November 2023 to 115.6 (2016=100), after rising by 0.2 percent in October. The CEI grew by 1.0 percent in the six-month period from May to November 2023, faster than the 0.5 percent gain over the previous six-month period.

“The LEI for Australia increased in November, partially reversing the downward trend of the three previous months,” said Ian Hu, Economic Research Associate at The Conference Board. “All components, save building approvals and rural goods exports, contributed positively to the LEI. Despite improvements in the LEI, positive contributions were relatively small, and the six-month growth rate is still negative and flashing recession. However, the recession signal is less intense now than earlier in the year suggesting diminishing headwinds to near-term growth. Still, The Conference Board currently expects real GDP to expand in Australia by 2.0 percent year-over-year in 2023, and moderate to 1.0 percent growth in 2024.”

The LEI for Australia increased slightly in November

Nearly all components contributed positively or or were neutral in November

Australia’s recession signal is less intense according to the 6-month growth rate, suggesting decelerating headwinds 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 -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.

The composite business cycle indexes pre- and post- benchmark revisions: 1960-present

AboutThe 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.

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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