The Conference Board CEI for the Euro Area, a measure of current economic activity, remained flat in December according to preliminary estimates, following three consecutive declines. Between June and December 2009, the coincident economic index decreased by 0.5 percent (about a -1.0 percent annual rate), slower than the 1.5 percent decline (about a -3.1 percent annual rate) during the previous six months. Additionally, the strengths and weaknesses among the coincident indicators have remained balanced in recent months. At the same time, real GDP grew at a 1.7 percent annual rate during the third quarter, its first increase since the first quarter of 2008.
The Conference Board LEI for the Euro Area has rebounded strongly since March, but its rate of growth has slowed recently. Meanwhile, The Conference Board CEI for the Euro Area continued to decline, albeit at a slower pace than earlier in 2009. Taken together, the recent behavior of the composite economic indexes suggests that the downturn in economic activity is bottoming out and that economic conditions will improve in the near term.
LEADING INDICATORS
Six of the eight components in The Conference Board LEI for the Euro Area increased in December. The positive contributors— in order from the largest positive contributor to the smallest— are the interest rate spread, the Economic Sentiment Index, real money supply, the Markit business expectations index (services), the Markit Purchasing Managers' Index (manufacturing) and the Dow Jones EURO STOXX® Index. Residential building permits was the only negative contributor in December while new orders of capital goods* remained unchanged.
With the 0.9 percent increase in December, The Conference Board LEI for the Euro Area now stands at 106.6 (2004=100). Based on revised data, this index increased 0.6 percent in November and increased 0.4 percent in October. During the six-month span through December, the index increased 6.1 percent, with six of the eight components increasing (diffusion index, six-month span equals 75.0 percent).
COINCIDENT INDICATORS
Two of the four components that make up The Conference Board CEI for the Euro Area increased in December. The positive contributors were retail trade and industrial production. Employment declined in December while manufacturing turnover remained unchanged.
After remaining unchanged in December, The Conference Board CEI for the Euro Area now stands at 101.2 (2004=100). Based on revised data, this index decreased 0.2 percent in November and decreased 0.1 percent in October. During the six-month period through December, the index decreased 0.5 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).
