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 again by 1.0 percent in September 2023 to 101.8 (2016=100), following a 1.0 percent decline in August. As a result, the LEI contracted by 4.9 percent in the six-month period from March to September 2023, a larger rate of decline than the 3.7 percent contraction over the previous six-month period from September 2022 to March 2023.

The Conference Board Coincident Economic Index^® (CEI) for the Euro Area, while increasing by 0.2 percent in September 2023, remained on the same level as last month at 108.0 (2016=100), due to downward revisions to July data. The CEI grew by 0.3 percent in the six-month period from March to September 2023, matching the 0.3 percent growth rate over the previous six-month period.

 “Risks of a downturn in the Euro Area economy have returned, as the Euro Area LEI declined again in September,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Manufacturing new orders, consumer confidence about future economic conditions, a negative yield spread, and the business expectations index in services sector, all negatively contributed to the headline index in each of the past six months. Elevated inflation, which could be stoked further by oil price spikes amid the Gaza conflict, tighter financial conditions, and lingering effects of the ongoing war in Ukraine, continue to create headwinds to economic activity. The Conference Board projects year-over-year real GDP to grow at a modest 0.7 percent rate in 2023.”

The Euro Area LEI continued to weaken in September

All indicators, except the systemic stress component, negatively contributed to the Euro Area LEI in September

The Euro Area LEI’s persistent decline continues to imply potential recession ahead 

 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