Global Leading Indicators

Using the Composite Indexes: The Leading Economic Index (LEI) 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 (CEI) provides an indication of the current state of the economy. Additional details are below.

The Conference Board Leading Economic Index^®(LEI) for China declined by 0.5 percent in May 2024 to 150.0 (2016=100), following a downwardly revised decline of 0.3 percent in April. As a result, the LEI declined by 1.7 percent over the six-month period ending May 2024, a slightly smaller decrease than the contraction of 1.9 percent over the previous six-month period.

The Conference Board Coincident Economic Index^® (CEI) for China improved by 1.2 percent in May 2024 to 146.7 (2016=100), following a downwardly revised decline of 1.0 percent in April. Overall, the CEI grew by 1.0 percent in the six-month period between November 2023 and May 2024, significantly down from the 4.4 percent growth rate over the previous six months period.

“The LEI for China declined again in May, following the downward trend that started in March 2022,” said Ian Hu, Economic Research Associate, at The Conference Board. “As in recent months, depressed consumer expectations weighed heavily on the Index. The 5000 Industrial Enterprises profitability survey, the Logistics Prosperity Index, and the PMI for manufacturing also fueled the decline. The six- and twelve-month growth rates remain weak, suggesting sluggish growth momentum and recession risks ahead. However, economic activity is expected to be supported by increasing public stimulus in the second half of year. Overall, The Conference Board forecasts annual real GDP growth at 5.0 percent in 2024 after 5.2 percent in 2023.”

The LEI for China remained on a downward trajectory

Non-financial components drove the decline of the China LEI in May

The six-month growth rate of the China LEI moved into recession signal territory in May

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 −3.1 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) and Coincident Economic Index® (CEI) for China
The composite economic indexes are key elements in an analytic system designed to signal peaks and troughs in the business cycle. Comprised of multiple independent indicators, 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 reflects current economic conditions and is highly correlated with real GDP. The LEI is a predictive tool that anticipates—or “leads”—turning points in the business cycle by around seven months.

The eight components of the Leading Economic Index® for China are:

• Consumer Expectation Index
• PMI: Mfg: New Export Order
• 5000 Industrial Enterprises Survey: Profitability
• Logistics Prosperity Index
• Loan: Medium & Long Term
• Floor Space Started
• City Labor Market: Demand
• Imports: Machinery and Transport Equipment

The four components of the Coincident Economic Index® for China are:

• Value-Added Industrial Production
• Retail Sales of Consumer Goods
• Electricity Production
• Railway: Freight Traffic

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