Global Leading Indicators

This month’s release of the composite economic indexes incorporates annual benchmark revisions which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

For more information, please visit https://www.conference-board.org/topics/business-cycle-indicators/ or contact us at indicators@conference-board.org.

The Conference Board Leading Economic Index^®(LEI) for Germany increased by 0.3 percent in November 2022 to 91.3 (2016=100), after decreasing by 0.3 percent in October. The LEI declined by 2.8 percent in the six-month period from May to November 2022, after a 4.2 percent contraction over the previous six-month period.

The Conference Board Coincident Economic Index^® (CEI) for Germany increased by 0.1 percent in November 2022 to 104.0 (2016=100), after decreasing by 0.2 percent in October. The CEI gained 0.1 percent in the six-month period from May to November 2022, a slower pace than the 0.5 percent increase over the six-month period from November 2021 to May 2022.

“The LEI for Germany rose in November reversing its October decline. However, the index remains on a downward trajectory which started in February,” said Allen Li, Associate Economist at The Conference Board. “Despite the improvement in consumer confidence and stock prices, the LEI for Germany remains about 3 percent lower compared to six months ago. High inflation, rising interest rates, an energy crisis, and a likely recession in the Euro Area still weigh on the German economy. The Conference Board projects that real GDP growth in Germany turned negative in the fourth quarter of 2022 and the economy could remain in recession through early 2023. Overall, real GDP growth in Germany is expected to be 1.8 percent in 2022, and slightly negative for 2023 overall.”

Consumer confidence and stock prices drove improvement in the LEI, offsetting declines in new orders

The Germany LEI still points to elevated 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 -4.7 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.7 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

The composite business cycle indexes pre- and post- benchmark revisions: 1965-present

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

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