Global Leading Indicators

For Release 10:30 AM ET, December 20, 2024

Using the Composite Indexes: The Leading Economic Index (LEI) provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The Coincident Economic Index (CEI) provides an indication of the current state of the economy. Additional details are below.

 The Conference Board Leading Economic Index^® (LEI) for Australia increased in October 2024 by 0.2% to 112.8 (2016=100), following a similar 0.2% increase in September. However, the LEI fell by 0.4% over the six-month period from April to October 2024, a much less intense decline than the contraction of 1.5% over the previous six-month period between October 2023 and April 2024.

The Conference Board Coincident Economic Index^® (CEI) for Australia also increased by 0.2% in October 2024 to 116.3 (2016=100), after increasing by 0.3% in September. Overall, the CEI grew by 1.0% over the six-month period from April to October 2024, up from the 0.4% increase over the previous six-month period.

“The LEI for Australia increased for a second consecutive month in October,” said Ian Hu, Economic Research Associate at The Conference Board. Strong positive contributions from the sales to inventories ratio and the money supply drove the index in October. All remaining components contributed negatively, especially share prices. The six-month and annual growth rates of the Index have become notably less negative since the middle of this year. As a result, the LEI remained outside of recession signal territory for the 2^nd consecutive month. Overall, this suggests slightly lessened headwinds to growth entering 2025. The Conference Board currently project’s Australia’s annual real GDP growth at 1.0% in 2024 and accelerating to 1.3% in 2025.”

The next release is scheduled for Thursday, January 16, 2025, at 10:30 A.M. ET.

The Australia LEI increased in October

The sales to inventories ratio and money supply drove the increase of the LEI

The six-month growth rate of the Australia LEI remained out of recession signal territory in October

NOTE: The chart illustrates the so-called 3Ds—duration, depth, and diffusion—for interpreting a downward movement in the LEI. Duration refers to how long the decline has lasted. Depth denotes the size of decline. Duration and depth are measured by the rate of change of the index over the most recent six months. Diffusion is a measure of how widespread the decline is among the LEI’s component indicators—on a scale of 0 to 100, a six-month diffusion index reading below 50 indicates most components are weakening.

The 3Ds rule signals an impending recession when: 1) the six-month diffusion index lies below 50, shown by the black warning signal lines in the chart; and 2) the LEI’s six-month rate of decline falls below the threshold of −2.9%. The red recession signal lines indicate months when both criteria are met simultaneously—and thus that a recession is likely imminent or underway.

About The Conference Board Leading Economic Index® (LEI) and Coincident Economic Index® (CEI) for Australia

The composite economic indexes are key elements in an analytic system designed to signal peaks and troughs in the business cycle. Comprised of multiple independent indicators, 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 reflects current economic conditions and is highly correlated with real GDP. The LEI is a predictive tool that anticipates—or “leads”—turning points in the business cycle by around seven months.

The seven components of Leading Economic Index® for Australia are:

• Yield Spread, 10Y – Policy Rate
• Share Prices, All Ordinaries S&P/ASX 200
• Money Supply, M3
• Building Approvals
• Rural Goods Exports
• Non-Farm Sector, Sale to Inventories Ratio
• Gross Operating Surplus, Private Non-Financial Corp.

The four components of the Coincident Economic Index® for Australia are:

• Employment
• Household Income
• Industrial Production
• Retail Trade

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

About The Conference Board

The Conference Board is the member-driven think tank that delivers Trusted Insights for What’s Ahead^®. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. ConferenceBoard.org