The Conference Board CEI for the Euro Area, a measure of current economic activity, increased in March according to preliminary estimates, after declining for the previous six months. Between September 2008 and March 2009, the coincident economic index declined by 2.2 percent (about a -4.3 percent annual rate), sharply faster than the 0.4 percent decline (about a -0.8 percent annual rate) for the previous six months.
Additionally, the weaknesses among the coincident indicators have remained very widespread, with none of the components increasing during the past six months. At the same time, real GDP declined at a 3.6 percent average annual rate during the second half of 2008 (including a decrease of 6.2 percent annual rate during the fourth quarter), its lowest two-quarter growth rate since 1975.
The Conference Board LEI for the Euro Area has stabilized in recent months, and the pace of its six-month decline has moderated substantially, although it remains near the levels last seen during the 1992-93 contraction. Meanwhile, the decline in the Conference Board CEI for the Euro Area over the last six months remains steeper than at any time prior to this downturn during the index’s 22-year history. Taken together, the recent behavior of the composite economic indexes suggests that the contraction in economic activity should continue in the near term but may become less deep in the months ahead.
LEADING INDICATORS
Five of the eight components in The Conference Board LEI for the Euro Area increased in March. The positive contributors - in order from the largest positive contributor to the smallest -
are interest rate spread, the business expectations index (services), real money supply, the Purchasing Managers' Index (manufacturing) and residential building permits. Negative contributors - in order from largest to smallest - are the stock price index and the Economic Sentiment Index. New orders of capital goods remained unchanged in March.
With the 0.2 percent increase in March, The Conference Board LEI for the Euro Area now stands at 92.4 (2004=100). Based on revised data, this index declined 0.2 percent in February and increased 0.7 percent in January. During the six-month span through March, the index decreased 6.0 percent, with two of the eight components increasing (diffusion index, six-month span equals 25.0 percent).
COINCIDENT INDICATORS
Three of the four components that make up The Conference Board CEI for the Euro Area increased in March. The positive contributors were manufacturing turnover, industrial production and retail trade. Employment declined in March.
With the 0.1 percent increase in March, The Conference Board CEI for the Euro Area now stands at 103.0 (2004=100). Based on revised data, this index decreased 0.5 percent in February and decreased 0.4 percent in January. During the six-month period through March, the index decreased 2.2 percent, with none of the four components increasing (diffusion index, six-month span equals 0.0 percent).
