LEI for Germany Declined in January
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LEI for Germany Declined in January

Latest Press Release

Updated : 2024-03-15


About the Leading Economic Index and the Coincident Economic Index:

The Leading Economic Index 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 provides an indication of the current state of the economy. Additional details are below.

The Conference Board Leading Economic Index® (LEI) for Germany declined by 0.6 percent in January 2024 to 89.0 (2016=100), largely reversing a 0.7 percent gain in December 2023. As a result, the LEI for Germany contracted by 4.0 percent between July 2023 and January 2024, a much higher rate of decline than the 0.3 percent contraction over the previous six-month period.

 The Conference Board Coincident Economic Index® (CEI) for Germany ticked up by 0.1 percent in January 2024 to 103.9 (2016=100), after a 0.1 percent decrease in December 2023. Over the six-month period between July 2023 and January 2024, the CEI for Germany fell by 0.5 percent, more than reversing the 0.2 percent gain over the previous six-month period.

 

“The LEI for Germany fell in January,” said Allen Li, Associate Economist at The Conference Board. “The improvement observed in December was short lived and the downward trend resumed. January’s decrease was driven largely by negative contributions from consumer confidence and the yield spread. The continued downward trajectory suggests that the German economy will still face growth headwinds in near term. The Conference Board currently expects Germany’s real GDP to be flat in Q1 ’24 but to recover modestly in subsequent quarters.”

 

The LEI for Germany declined in January

 

 

January’s decrease was driven by negative contributions from consumer confidence and the yield spread 

 

 

Recession signals continued to flash for German economy 

 

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 -4.6 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.6 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 Germany: 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 5 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 seven components of The Conference Board Leading Economic Index® for Germany include: New Orders, Yield 10-Year Minus 3-Month Time Deposits Rate, Consumer Confidence Index, Inventory Change, New Residential Construction Orders, Stock Price Index, and Gross Enterprises and Properties Income.

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

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