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Released: Friday, January 30, 2015

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This month’s release incorporates annual benchmark revisions to the composite indexes and comprehensive revision to The Conference Board Leading Economic Index® (LEI) for the Euro Area. See details below and on Page 3 of the pdf.

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The Conference Board Leading Economic Index® (LEI) for the Euro Area increased 0.2 percent to 103.3 (2010=100) in December, following a 0.2 percent increase in November, and 0.1 percent decrease in October.

“The Euro Area Leading Economic Index continues to signal slow growth in the short-term outlook. The anticipation of quantitative easing and lower oil prices have resulted in more optimism reflected in improved stock prices, consumer confidence and new orders for manufacturing goods,” says Bert Colijn, Senior Economist at The Conference Board. “However, the uncertainties surrounding the relationship of Greece with the rest of the Euro Area, the expected impact of quantitative easing, and the intensification of conflict in Ukraine continue to be sources of volatility for the outlook of growth in Europe.”

The Conference Board Coincident Economic Index® (CEI) for the Euro Area, which measures current economic activity, was unchanged in December, according to preliminary estimates. The index now stands at 99.9* (2010 = 100). The CEI increased 0.1 percent in November and increased 0.2 percent in October.

About The Conference Board Leading Economic Index® (LEI) for the Euro Area

The Conference Board Leading Economic Index® for the Euro Area was launched in January 2009. Plotted back to 1987, this index has successfully signaled turning points in the business cycle of the bloc of countries that now constitute the Euro Area, defined by the common currency zone.

The Conference Board currently produces leading economic indexes for twelve other individual countries, including Australia, Brazil, China, France, Germany, India, Japan, Korea, Mexico, Spain, the U.K. and the U.S.

The eight components of The Conference Board Leading Economic Index® for the Euro Area include:

Interest Rate Spread (source: European Central Bank)
Consumer expectation of general economic condition of next 12 months (source: European Commission)
Index of Residential Building Permits Granted (source: Eurostat)
EURO STOXX® Index (source: STOXX Limited)
Systemic Stress Composite Indicator (source: European Central Bank)
Capital Goods New Orders, index (source: European Central Bank)
Eurozone Manufacturing New Orders Index (source: Markit Economics)
Eurozone Service Sector Future Business Activity Expectations Index (source: Markit Economics)

To view The Conference Board calendar for 2015 indicator releases:
www.conference-board.org/data/

* Series in The Conference Board LEI for the Euro Area that are based on The Conference Board estimates are real money supply and residential building permits. All series in The Conference Board CEI for the Euro Area are based on The Conference Board estimates (employment, industrial production, retail trade, and manufacturing turnover).

About The Conference Board

The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.

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January 2015 Annual Benchmark Revisions

The January 30, 2015 release of The Conference Board Leading Economic Index® (LEI) for the Euro Area incorporates annual benchmark revisions to the composite indexes. Also, effective with the January 2015 release, the history of the composite indexes has been updated to reflect the inclusion of Lithuania into the Euro Area, and the base year of the composite indexes was changed to 2010 = 100 from 2004 = 100. These regular benchmark revisions bring the indexes up-to-date with revisions in the source data. The 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 incorporated when the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes and their month-over-month changes will no longer be directly comparable to those issued prior to the benchmark revision. The entire history of the indexes from 1987 to present has been revised.

January 2015 Comprehensive Benchmark Revisions

In addition to these regular annual revisions, The Conference Board implemented a comprehensive revision of The Conference Board Leading Economic Index® (LEI) for the Euro Area, effective with the January 30, 2015 release.

These comprehensive revisions are the result of an extensive reevaluation of existing components of The Conference Board Leading Economic Index® for the Euro Area. The Conference Board has decided to add one component, replace three components and make a minor adjustment to another component. The composition changes reflected in the new LEI address structural changes that have occurred in the Euro Area economy in the last three decades. The changes in the LEI composition include:

  • incorporating the capital goods new orders index, from the European Central Bank experimental statistics based on national data;
  • incorporating the Systemic Stress Composite Indicator from the European Central Bank starting in 1999, and omitting real money supply (M2) starting in 1987;
  • replacing the Markit Purchasing Managers’ Index (Manufacturing) with the Markit Manufacturing New Orders Index;
  • replacing the Economic Sentiment Indicator with Consumer Expectations of General Economic Situation over Next 12 months, from the European Commission.

In addition to these major changes to the composition, The Conference Board has implemented changes in the methodology and procedures used in the calculation process. These modifications are:

  • normalized levels of the indicator rather than its monthly changes will be used to calculate the component contributions of components based on diffusion indexes such as the Markit Manufacturing New Orders Index, and the Markit Business Expectations Index (Services);
  • when component data are missing, autoregressions in log differences instead of levels will be used to calculate the statistical imputation of the missing months;
  • trend adjustment will be done in two periods: 1987-1999 and 2000-2013; and
  • Systemic Stress Composite Indicator contributions to the LEI are calculated from its normalized levels (not monthly changes) and it is inverted.

As a result of these changes, the history of the revised indexes and their month-over-month changes will no longer be directly comparable to those issued prior to the comprehensive benchmark revision.

The composition changes in the new LEI address partly structural changes that have occurred in the Euro Area economy in the last three decades as well as advances in the available statistics for the Euro Area economy. The Conference Board research shows that the new LEI is a more consistent measure of the Euro Area business cycle and shows better performance in predicting cyclical downturns.

For more information, please visit our website at:
or contact:
indicators@conference-board.org.

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THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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