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 fell by 0.9 percent in July 2023 to 103.8 (2016=100), following the same rate of decline as in June. Meanwhile, the LEI contracted by 3.9 percent in the six-month period from January to July 2023, a slower rate of decline than the 4.7 percent contraction over the previous six-month period from July 2022 to January 2023.

The Conference Board Coincident Economic Index^® (CEI) for the Euro Area inched up by 0.1 percent in July 2023 to 108.3 (2016=100), following a 0.1 percent increase in June. The CEI grew by 0.6 percent in the six-month period from January to July 2023, a slightly slower rate of growth than 0.7 percent over the previous six-month period.

“The outlook for the Euro Area economy remains weak as the Euro Area LEI declined again in July. The index has now returned to signaling recession ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board “New orders, and business and consumer confidence indicators weighed on the LEI, suggesting weakness in the economy remains widespread. With elevated prices and higher costs of borrowing, headwinds to economic growth will likely persist. The Conference Board projects year-over-year real GDP to grow at a modest 0.7 percent rate in 2023.”

The Euro Area LEI maintained its downward trajectory

All components, excluding stock prices, made negative contributions to the LEI in July

The Euro Area LEI signals potential for recession again 

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.

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. www.tcb.org