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 Germany was unchanged in February 2024 at 88.5 (2016=100), after a 1.1 percent decline in January. The LEI for Germany contracted by 3.6 percent between August 2023 and February 2024, an accelerated pace of decline from the 2.0 percent contraction over the previous six-month period.             

The Conference Board Coincident Economic Index^® (CEI) for Germany was also unchanged in February 2024 at 103.9 (2016=100), after a 0.1 percent increase in January. Over the six-month period between August 2023 and February 2024, the CEI for Germany fell by 0.3 percent, continuing the 0.2 percent decline over the previous six-month period.

“The LEI for Germany was unchanged in February, pausing at the lowest level since March 2010 reached last month,” said Allen Li, Associate Economist at The Conference Board. “February’s flat reading was the result of positive contributions from consumer confidence, stock prices, and change in inventories being balanced by negative contributions from the yield spread and new residential construction orders. LEI growth on a six-month basis remains negative and below its long-term trend, thus signaling recession risks in the near term. The Conference Board currently expects Germany’s real GDP to be flat in Q1 ’24 and recover only modestly in subsequent quarters.”

The LEI for Germany remained flat at a multi-year low in February

Positive contributions from consumer confidence, stock prices, and inventories were balanced by negative contributions from the yield spread and new residential construction orders 

Growth in the LEI for Germany remains negative and below trend, thus signaling recession risks in the near term 

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.

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About The Conference Board

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