Global Leading Indicators

New York, December 19, 2022…The Conference Board Leading Economic Index^®(LEI) for Mexico increased by 0.6 percent in October 2022 to 106.3 (2016=100), following a 0.3 percent decline in September. However, the LEI contracted by 3.6 percent in the six-month period from April to October 2022, a reversal from the 1.2 percent growth in the six-month period from October 2021 to April 2022.

The Conference Board Coincident Economic Index^® (CEI) for Mexico increased by 0.2 percent in October 2022 to 110.0 (2016=100), after a 0.1 percent increase in September. The CEI grew by 1.4 percent in the six-month period from April to October 2022, slower than the 2.5 percent improvement over the previous six-month period.

“The LEI for Mexico increased in October after several months of decline,” said Casey Cloutier, Economic Research Analyst at The Conference Board. “The increase was led by strong positive contributions from stock prices and construction activity, which more than offset negative contributions from most other components. High inflation, rising interest rates, slowing global growth, and a possible recession in the US pose challenges to the growth outlook in Mexico. The Conference Board projects the year-over-year growth rate to moderate at 1.0 percent in 2023.”

The Mexico LEI increased in October following several months of decline

Positive contributions from stock prices and construction activity led to the improvement

The recent trajectory of the Mexico LEI suggests recession risks remain in the coming months

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 -3.0 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.0 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 Mexico: 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 six components of The Conference Board Leading Economic Index^® for Mexico include: Industrial Production (Construction), Stock Prices, U.S. Refiners’ Acquisition Cost of Domestic and Imported Crude Oil, Manufacturing Inventories (Opinion Balance), Federal Funds Rate, and Real Exchange Rate.

To access data, please visit: https://data-central.conference-board.org/    

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