Conference Board Leading Economic Index for Euro area fell 0.6% in December to 108.5 following a 0.6% decrease in November; GDP growth projected to slow to 0.3% year-over-year in 2023

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January 17, 2023 (press release) –

This month’s release of the composite economic indexes incorporates annual benchmark revisions which bring them up-to-date with revisions in the source data. These 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 not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

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The Conference Board Leading Economic Index®(LEI) for the Euro Area fell by 0.6 percent in December 2022 to 108.5 (2016=100), following a 0.6 percent decline in November. The LEI declined by 5.0 percent in the six-month period from June to December 2022, faster than the 0.5 percent decrease over the previous six-month period.

The Conference Board Coincident Economic Index® (CEI) for the Euro Area increased by 0.1 percent in December 2022 to 107.3 (2016=100), following a 0.2 percent increase in November. The CEI grew by 0.4 percent in the six-month period from June to December 2022, following a 0.7 percent increase from December 2021 to June 2022.

“The Euro Area LEI fell sharply again in December, its tenth consecutive month of decline,” said Casey Cloutier, Economic Research Analyst at The Conference Board. “Negative contributions to the LEI were widespread in both financial and non-financial components, with worsening consumer expectations and falling manufacturing orders leading the decline. Persistently high inflation and tightening monetary policy continue to weigh on economic growth and are likely to push the Euro Area into recession in short order, if it is not already. The Conference Board projects that year-over-year real GDP growth will slow to 0.3 percent in 2023.”

Most LEI components contributed to the decline in the LEI

The persistent declines in the LEI suggest that recession risks remain elevated for the Euro Area

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 -6.7 percent. The red dotted line is drawn at the threshold value (measured by the median, -6.7 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.


The composite business cycle indexes pre- and post- benchmark revisions: 1987-present 

About The Conference Board Leading Economic Index® (LEI) for Euro Area: 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 1 month. 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 the Euro Area include: ECB Yield Spread, Consumer Expectation of General Economy, Manufacturing New Orders, Volume of Order Books, Business Expectations Survey, Eurostoxx Index, Systemic Stress Composite Indicator, Building Permits.

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About The Conference Board

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