The Conference Board LEI for Germany Up in October

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The Conference Board Leading Economic Index (LEI) for Germany increased 0.2 percent and The Conference Board Coincident Economic Index (CEI) increased 0.1 percent in October.

• The Conference Board LEI for Germany rose in October. The increase was largely driven by new residential construction orders and stock prices. However, the leading economic index fell 0.6 percent (about a −1.3 percent annual rate) between April and October 2015, a sharp reversal from its growth of 3.0 percent (about a 6.2 percent annual rate) over the previous six months. In addition, the strengths among the leading indicators have become less widespread over the past six months.
• The Conference Board CEI for Germany, a measure of current economic activity, edged up in October. Over the six-month period ending October 2015, the coincident economic index increased 0.3 percent (about a 0.6 percent annual rate), down from 0.9 percent (about a 1.7 percent annual rate) over the previous six months. In addition the strengths among the coincident indicators have become less widespread and are now only balanced with weaknesses. Meanwhile, real GDP grew by 1.3 percent (annual rate) in the third quarter, down from 1.8 percent (annual rate) in the second quarter.
• Despite the small increase in October, the LEI has declined in four out of the last six months and, as a result, its six-month growth rate remains negative. Meanwhile, the CEI has increased modestly over the same time period and its six-month growth has slowed. Taken together, the composite indexes suggest that the pace of economic activity is unlikely to accelerate going into 2016.

LEADING INDICATORS. Five of the seven components that make up The Conference Board LEI for Germany increased in October. The positive contributors—in order from the largest positive contributor to the smallest—were new residential construction orders*, stock prices, the yield spread, inventory change contribution to real GDP change *, and gross enterprises and properties income*. Negative contributors—in order from larger to smaller—were consumer confidence and new orders in investment goods industries.

With the 0.2 percent increase in October, The Conference Board LEI for Germany now stands at 108.0 (2010=100). Based on revised data, this index declined 0.4 percent in both September and August. During the six-month span through October, the index decreased 0.6 percent, with four of the seven components increasing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. Two of the four components that make up The Conference Board CEI for Germany increased in October. The positive contributors were employed persons and industrial production. Retail trade and manufacturing sales declined in October.

With the 0.1 percent increase in October, The Conference Board CEI for Germany now stands at 105.9 (2010=100). Based on revised data, this index decreased 0.1 percent in September and remained unchanged in August. During the six-month period through October, the index increased 0.3 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).