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For Release 11:00 AM ET, October 18, 2024
Using the Composite Indexes: The Leading Economic Index (LEI) 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 (CEI) provides an indication of the current state of the economy. Additional details are below.
The Conference Board Leading Economic Index®(LEI) for Mexico declined by 1.7% in August 2024 to 114.9 (2016=100), after a minimal increase of 0.1% in July. Over the six-month period between February and August 2024, the LEI declined by 4.9%, a much higher rate of decline than the -2.6% decrease recorded over the previous six-month period between August 2023 and February 2024.
The Conference Board Coincident Economic Index® (CEI) for Mexico remained unchanged at to 117.5 (2016=100) in Augusy 2024, after increasing by 0.2% in July. Overall, the CEI accelerated to 0.6% over the six-month period between February and August 2024, close to three times more than the growth rate of 0.2% over the previous six-month period.
“The Mexico LEI fell in August,” said Malala Lin, Economic Research Associate, at The Conference Board. “Discounting the marginal increase of the LEI in July, this decline reasserted the downward trend that started in February this year. With the exception of the money market rate, all components contributed negatively to the Index in August, and most notably the weaker peso against the US dollar. As the new Sheinbaum administration takes office this month, efforts to improve foreign investor relations have become one of the top focuses, which, if successful, may mitigate some headwinds to growth. Nevertheless, the six-month and annual percent change of the Index went deeper into the negative in August, signaling recession risks. Overall, The Conference Board expects real GDP to grow only by 1.4% in 2024 after 3.2% in 2023.”
The next release is scheduled for Tuesday, November 19, 2024, at 11 A.M. ET.
NOTE: The chart illustrates the so-called 3Ds—duration, depth, and diffusion—for interpreting a downward movement in the LEI. Duration refers to how long the decline has lasted. Depth denotes the size of decline. Duration and depth are measured by the rate of change of the index over the most recent six months. Diffusion is a measure of how widespread the decline is among the LEI’s component indicators—on a scale of 0 to 100, a diffusion index reading below 50 indicates most components are weakening.
The 3Ds rule signals an impending recession when: 1) the six-month diffusion index lies below 50, shown by the black warning signal lines in the chart; and 2) the LEI’s six-month rate of decline falls below the threshold of −4.9%. The red recession signal lines indicate months when both criteria are met simultaneously—and thus that a recession is likely imminent or underway.
About The Conference Board Leading Economic Index® (LEI) and Coincident Economic Index® (CEI) for Mexico
The composite economic indexes are key elements in an analytic system designed to signal peaks and troughs in the business cycle. Comprised of multiple independent indicators, 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 reflects current economic conditions and is highly correlated with real GDP. The LEI is a predictive tool that anticipates—or “leads”—turning points in the business cycle by around five months.
The six components of the Leading Economic Index® for Mexico are:
The three components of the Coincident Economic Index® for Mexico are:
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. ConferenceBoard.org
With graph and summary table
October 18, 2024
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