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 June 2023 to 104.8 (2016=100), following a decline of 0.7 percent in May. Meanwhile, the LEI contracted by 3.2 percent in the six-month period from December 2022 to June 2023, a slower rate of decline than the 5.2 percent fall over the previous six-month period from June to December 2022.
The Conference Board Coincident Economic Index® (CEI) for the Euro Area ticked up by 0.1 percent in June 2023 to 108.1 (2016=100), following a 0.2 percent increase in May. The CEI grew by 0.6 percent in the six-month period from December 2022 to June 2023, faster than the 0.3 percent increase over the previous six-month period.
“The Euro Area LEI fell for a sixteenth consecutive month in June,” said Casey Cloutier, Economic Research Analyst at The Conference Board. “Nearly all components contributed negatively to the decline, save for the increasing volume of order books – the only positive contributor. With inflation persistently high, rising interest rates are likely to remain as headwinds to economic growth prospects in the coming months. For these reasons, The Conference Board projects year-over-year real GDP to be slightly positive at 0.7 percent in 2023.”
The Euro Area LEI continued to trend downwards
Most components made negative contributions to the LEI in June
The behavior of the EA LEI no longer signals recession, but future economic activity may still weaken
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
PRESS RELEASE
LEI for France Decreases in May
July 17, 2024
PRESS RELEASE
LEI for the Euro Area Fell Further in June
July 16, 2024
PRESS RELEASE
LEI for Brazil Increased in June
July 15, 2024
PRESS RELEASE
LEI for Germany Dipped in May
July 15, 2024
PRESS RELEASE
LEI for Spain Rose Slightly in May
July 12, 2024
PRESS RELEASE
LEI for the United Kingdom Dipped in May
July 11, 2024
All release times displayed are Eastern Time
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