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 the Euro Area declined by 0.7 percent in April 2024 to 98.5 (2016=100), following a downwardly revised 0.5 percent drop in March. As a result, the LEI contracted by 4.2 percent over the six-month period from October 2023 to April 2024, a smaller pace of decline than the 5.1 percent contraction over the six-month period from April to October 2023.

The Conference Board Coincident Economic Index^® (CEI) for the Euro Area remained flat in April 2024, at 108.5 (2016=100), after a slight increase of 0.2 percent in March. The CEI grew by 0.4 percent over the six-month period from October 2023 to April 2024, after increasing by 0.3 percent over the previous six-month period.

“The Euro Area LEI fell further in April, continuing the downtrend that started two years ago,” said Ian Hu, Economic Research Associate, at The Conference Board. “A large negative contribution from the yield spread, in conjunction with weak manufacturing new orders, consumer expectations, and order books volume weighed heavily on the Index. Overall, the LEI remains depressed, both on a six-month and annual basis, and continues to point to recession risks going forward. However, forthcoming policy rate cuts by the European Central Bank are expected to alleviate these growth headwinds in the second half of 2024.”

The Euro Area LEI fell for the 26^th consecutive month in April

Non-financial components and the yield spread fueled the Euro Area LEI’s decline

Although the six-month growth rate of the Euro Area LEI inched up, it continues to warn of recession risks

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 -6.9 percent. The red dotted line is drawn at the threshold value (measured by the median, -6.9 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 Euro Area

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 1 month. 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 the Euro Area include: ECB Yield Spread, Consumer Expectation of General Economy, Manufacturing New Orders, Volume of Order Books, Business Expectations Survey, Eurostoxx Index, Systemic Stress Composite Indicator, Building Permits.

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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