The Conference Board Leading Economic Index(R) (LEI) for the
Euro Area Increased in December
This month's release incorporates annual benchmark revisions to
the composite indexes and a comprehensive revision to The
Conference Board Leading Economic Index(R) (LEI) for the Euro Area.
See details below.
PR Newswire
BRUSSELS, Jan. 30, 2015
BRUSSELS, Jan. 30, 2015 /PRNewswire/ -- The Conference Board
Leading Economic Index(R) (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(R) (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(R) (LEI) for
the Euro Area
The Conference Board Leading Economic Index(R) 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(R) 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(R) 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:
http://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).
Summary Table of Composite Indexes
2014 6-month
------- -----
Oct Nov Dec Jun to Dec
Leading Economic Index (LEI) 102.9 p 103.1 p103.3 p
Percent Change -0.1 p 0.2 p 0.2 p 1.4 p
Diffusion 62.5 56.3 62.5 62.5
Coincident Economic Index (CEI) 99.8 p 99.9 p 99.9 p
Percent Change 0.2 p 0.1 p 0.0 p 0.4 p
Diffusion 100.0 87.5 75.0 100.0
n.a. Not available p Preliminary r Revised
Indexes equal 100 in 2010
Source: The Conference Board All Rights
Reserved
About The Conference Board
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with the practical knowledge they need to improve their performance
and better serve society. The Conference Board is a non-advocacy,
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United States.
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January 2015 Annual Benchmark Revisions
The January 30, 2015 release of The Conference Board Leading
Economic Index(R) (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(R) (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(R) 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:
1. incorporating the capital goods new orders index, from the European
Central Bank experimental statistics based on national data;
2. incorporating the Systemic Stress Composite Indicator from the European
Central Bank starting in 1999, and omitting real money supply (M2)
starting in 1987;
3. replacing the Markit Purchasing Managers' Index (Manufacturing) with the
Markit Manufacturing New Orders Index;
4. 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:
1. 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);
2. when component data are missing, autoregressions in log differences
instead of levels will be used to calculate the statistical imputation of
the missing months;
3. trend adjustment will be done in two periods: 1987-1999 and 2000-2013;
and
4. 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
http://www.conference-board.org/data/bci.cfm or contact
indicators@conference-board.org.
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