Global Business Cycle Indicators


Press Release Archive

Released: Wednesday, March 19, 2008

The Conference Board announced today that the leading index for Germany declined 1.1 percent and the coincident index increased 0.4 percent in January.

Says Bart Van Ark, recently appointed Chief Economist of The Conference Board: "The economic picture in Germany is clouding over. January's drop in the leading index — its largest monthly decline since February 2003 — comes largely because of falls in both stock prices and consumer confidence. The index has reversed the gains it made during the first half of 2007, and the weakness that started in financial components has spread through the rest of the index components. This suggests that we may be seeing the end of the past year's strong gains in industrial production and employment."

The Coincident Index for Germany increased 0.4 percent in January, following a 0.2 percent increase in December, and no change in November.

  • In January, the leading index experienced its largest monthly decline since February of 2003. The index has now fallen in four of the last six months. Stock prices and the consumer confidence index each made very large negative contributions in January. Since July 2007, the leading index fell 2.2 percent (about a -4.3 percent annual growth rate), reversing the gain of 2.1 percent from January 2007 to July 2007 (about a 4.3 percent annual rate). Additionally, the weaknesses among the leading indicators have become slightly more widespread than the strengths in recent months.
  • The coincident index, a measure of current economic activity, increased in January. Sharp increases in industrial production and employment were the primary reason for the gain in the index in January. Between July 2007 and January 2008, the coincident index increased by 0.9 percent (about a 1.8 percent annual growth rate), at about the same rate which prevailed between January 2007 and July 2007. Despite the steady increase in the coincident index, the strengths and weaknesses among the coincident indicators have become balanced in January.
  • After fluctuating around a slightly rising trend from February 2006 through July 2007, the leading index has fallen sharply in the past six months. The coincident index has continued to grow steadily, but its growth has moderated somewhat since the first quarter of 2007. At the same time, real GDP growth slowed to a 1.1 percent annual rate in the fourth quarter, down from a 1.7 percent average annual rate during the second and third quarters. The recent behavior of the leading and coincident indexes suggests that the German economy should continue to grow, albeit at a slower pace, in the near term.

LEADING INDICATORS. Two of the seven components in the leading index increased in January. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — are inventory change series*, and gross enterprises and properties income*. Negative contributors — in order from largest to smallest — are stock prices, consumer confidence, new residential construction orders*, new orders in investment goods industries, and yield spread.

With the 1.1 percent decrease in January, the leading index now stands at 98.0 (1990=100). Based on revised data, this index increased 0.1 percent in December and declined 0.4 percent in November. During the six-month span through January, the leading index decreased 2.2 percent, with three of the seven components increasing (diffusion index, six-month span equals 42.9 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in January. The positive contributors to the coincident index were industrial production, employed persons, and retail trade. Manufacturing sales declined in January.

With the 0.4 percent increase in January, the coincident index now stands at 110.4 (1990=100). Based on revised data, this index increased 0.2 percent in December and remained unchanged in November. During the six-month period through January, the coincident index increased 0.9 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).

DATA AVAILABILITY The data series used to compute the two composite indexes reported in this release are those available "as of" 10:00 A.M. ET March 17, 2008. Some series are estimated as noted below.

NOTES: Series in the leading index for Germany that are based on The Conference Board estimates are inventory change, new residential construction orders, and gross enterprises and properties income. There are no series in the coincident index for Germany that are based on The Conference Board estimates.


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