Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for the Euro Area declined by 0.6 percent in February 2024 to 99.8 (2016=100), following a 0.8 percent drop in January. As a result, the LEI contracted by 4.6 percent in the six-month period from August 2023 to February 2024, the same rate of decline over the previous six-month period from February to August 2023.

The Conference Board Coincident Economic Index^® (CEI) for the Euro Area remained flat in February 2024, at 108.4 (2016=100), after a downward revision of 0.2 percent in January. The CEI grew by 0.4 percent in the six-month period from August 2023 to February 2024, after contracting by -0.1 percent over the previous six-month period.

“The Euro Area LEI continued to fall in February” said Ian Hu, Economic Research Associate, at The Conference Board. “Negative contributions, mainly from the yield spread, consumer expectations, and manufacturing new orders more than offset the positive contributions from stock prices and the systemic stress indicator. Over a six-month period, manufacturing new orders, yield spread, and survey results on business and consumer expectations continue to weigh on the LEI. Overall, the fall in the LEI points to persisting risks to economic growth in the Euro Area in 2024. The Conference Board currently projects modest real annual GDP growth in 2024, at a 0.8 percent.”

The Euro Area LEI continued to decline

All non-financial components contributed to the LEI decline in February

The six-month growth rate of the Euro Area LEI remains below its long-term trend, signaling 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