Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for Spain decreased slightly by 0.3 percent in February 2023 to 95.7 (2016=100), after increasing by 0.1 percent in January. The LEI decreased by 2.1 percent in the six-month period from August 2022 to February 2023, after falling by 2.7 percent in the six-month period between February and August 2022.

The Conference Board Coincident Economic Index^® (CEI) for Spain increased by 0.2 percent in February 2023 to 107.2 (2016=100), after a similar increase last month. The CEI contracted by 0.9 percent in the six-month period between August 2022 and February 2023, partially reversing the 1.6 percent growth over the previous six-month period.

“The LEI for Spain ticked down in February, but all non-financial components improved, potentially a sign of improving prospects for the Spanish economy” said Allen Li, Associate Economist at The Conference Board. “However, the level of the LEI remains about 5 percent below its most recent peak in November 2021 after persistent declines last year. Energy prices started to see some easing early this year, but inflation remains elevated. Taken together, downside risks to growth remain, and while the Spanish economy is expected to avoid recession, economic growth will slow in 2023. The Conference Board forecasts year-over-year GDP growth of 1.2 percent in 2023.” 

The Spain LEI ticked down in February

Non-financial components of the Spain LEI rose in February

The growth trend of the Spain LEI has become less negative

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 -1.9 percent. The red dotted line is drawn at the threshold value (measured by the median, -1.9 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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