Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for Germany fell by 0.5 percent in March 2023 to 90.5 (2016=100), almost reversing a 0.6 percent increase in February. The LEI contracted by 0.5 percent in the six-month period from September 2022 to March 2023, a much slower contraction than 5.0 percent over the previous six-month period.

The Conference Board Coincident Economic Index^® (CEI) for Germany ticked up by 0.1 percent in March 2023 to 105.4 (2016=100), after an upwardly revised increase of 0.1 percent in February. The CEI grew by 1.2 percent in the six-month period from September 2022 to March 2023, following a 0.3 percent increase over the six-month period from March to September 2022.

“The LEI for Germany slipped in March, and its six-month growth rate remained negative despite some recent improvement from notable weakness in 2022,” said Allen Li, Associate Economist at The Conference Board. “The financial and non-financial components of the LEI declined in March, signaling persisting downside risks amid high core inflation and rising interest rates. On balance, The Conference Board expects Germany’s real GDP to contract slightly by 0.1 percent year-over-year in 2023, downwardly revised from a positive growth rate of 0.1 percent.”

The Germany LEI fell in March after back-to-back increases in the first two months of the year

Most components of the LEI remained weak in March

Although the LEI is no longer signaling recession it continues to warn of weakness 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 -4.6 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.6 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 Germany: 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 5 months. 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 seven components of The Conference Board Leading Economic Index^® for Germany include: New Orders, Yield 10-Year Minus 3-Month Time Deposits Rate, Consumer Confidence Index, Inventory Change, New Residential Construction Orders, Stock Price Index, and Gross Enterprises and Properties Income.

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