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.

The Conference Board Leading Economic Index^®(LEI) for China fell by 0.1 percent in February 2024 to 151.8 (2016=100), reversing an upwardly revised 0.1 percent increase in January. As a result, the LEI declined by 1.4 percent during the six-month period ending February 2024, following a 1.5 percent contraction over the previous six-month period.

The Conference Board Coincident Economic Index^® (CEI) for China also decreased slightly by 0.1 percent in February 2024 to 148.5 (2016=100), taking a bite out of a 1.6 percent increase in January. The CEI grew by 3.6 percent in the six-month period between August 2023 and February 2024, a significantly faster pace than the 1.6 percent growth rate over the previous six months period.

“The LEI for China declined in February,” said Ian Hu, Economic Research Associate, at The Conference Board. “Depressed consumer expectations continue to weigh on the LEI, and more than offset the positive contributions from imports of machinery and transport equipment and medium to long-term loans. The persisting downward trend of the LEI suggests further headwinds to growth in coming months. Despite these headwinds, the Chinese government’s left its real GDP growth target for 2024 unchanged at about 5 percent. Against this background, the Conference Board expects that stimulus measures will be adopted to support the economy and has accordingly revised up its annual real GDP growth forecast for China to 4.6 percent in 2024.”

The China LEI inched down in February

Depressed consumer expectations continue to weigh on the LEI

China’s six-month growth rate points to persisting headwinds to economic activity

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 -3.1 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.1 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 China

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 eight components of The Conference Board Leading Economic Index® for China include Consumer Expectation Index, PMI: Mfg: New Export Order, 5000 Industrial Enterprises Survey, Logistics Prosperity Index, Loan: Medium & Long Term, Floor Space Started, City Labor Market: Demand, and Imports: Machinery and Transport Equipment.

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