Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for Spain declined by 0.4 percent in December 2022 to 95.9 (2016=100), after ticking down by 0.1 percent in November. The LEI decreased by 2.3 percent in the six-month period from June to December 2022, after decreasing by 2.7 percent in the six-month period between December 2021 and June 2022.

The Conference Board Coincident Economic Index^® (CEI) for Spain remained unchanged in December 2022 at 106.9 (2016=100), after declining by 0.3 percent in November. The CEI contracted by 1.0 percent in the six-month period between June and December 2022, a partial reversal from the 1.8 percent growth over the previous six-month period.

“The LEI for Spain declined in December, driven by weaknesses in labor markets and manufacturing orders,” said Allen Li, Associate Economist at The Conference Board. “The LEI suggests risks of a downturn in the near term remain elevated. Consistent with the weakness in the LEI, current economic conditions, measured by the coincident economic index (CEI), have been on a downward trajectory since September 2022. While inflation in the Spanish economy continued to decline, the labor market still showed signs of weakening, which may impact consumer spending in the months ahead. The Conference Board projects that real GDP growth in Spain was flat in Q4 ’22, and will remain so for Q1 ‘23, before picking back up in Q2 ‘23.”

The Spain LEI Decreased in December

Weaknesses in Job Placement and Order Books led the decline in LEI at the end of 2022

Widespread weakness in the LEI suggests recession risks remain

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 -1.8 percent. The red dotted line is drawn at the threshold value (measured by the median, -1.8 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 Spain: 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 3 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 Spain include: Capital Equipment, Component of Industrial Production, Spanish Contribution to Euro M2, Spanish Equity Price Index, Long Term Government Bond Yield (inverted), Order Books Survey , and Job Placement.

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