April 27, 2023
(press release)
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The Conference Board Leading Economic Index®(LEI) for China increased by 0.1 percent in March 2023 to 155.9 (2016=100), after declining by 0.3 percent in February. The LEI contracted by 3.2 percent from September of 2022 to March of 2023, less than the decline of 4.6 percent over the previous six months. The Conference Board Coincident Economic Index® (CEI) for China increased by 2.3 percent in March 2023 to 144.6 (2016=100), after a 0.4 percent decrease in February. The CEI grew by 3.9 percent in the six-month period between September 2022 and March 2023, an improvement over the 0.6 percent increase between March and September of 2022. “The LEI for China inched up in March, the first increase in 12 months, after the country recently emerged from its zero-Covid policy,” said Andrew Dearborn, Economic Research Assistant at The Conference Board. “The monthly increase may reflect an easing of drags on growth in the year ahead. Machinery imports and a measure of the logistics industry increased to offset declines in all other components. However, the growth outlook may face headwinds such as potential recession risks in major economies and depressed global demand. Despite these headwinds, and considering an expected rebound in domestic demand, The Conference Board forecasts GDP growth to be 5.1 percent in 2023, but the expansion path in coming months may be uneven.” The China LEI increased in March, suggesting the downtrend in its trajectory may be easing Widespread weaknesses among non-financial components drove the decline in the LEI over the past 6 months Recession risks remain elevated despite the monthly increase, but the 6-month growth rate of the LEI may have bottomed 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 -3.1 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.1 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 China: 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 eight components of The Conference Board Leading Economic Index® for China include Consumer Expectation Index, PMI: Mfg: New Export Order, 5000 Industrial Enterprises Survey, Logistics Prosperity Index, Loan: Medium & Long Term, Floor Space Started, City Labor Market: Demand, and Imports: Machinery and Transport Equipment. 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. www.conference-board.org • Learn more about our mission and becoming a member 
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