The Conference Board CEI for the Euro Area, a measure of current economic activity, continued to decline in July according to preliminary estimates. Between January and July 2009, the coincident economic index decreased by 1.9 percent (about a -3.8 percent annual rate), slightly slower than the 2.4 percent decline (about a -4.7 percent annual rate) between July 2008 and January 2009. Additionally, the weaknesses among the coincident indicators have remained very widespread. At the same time, real GDP fell at a 0.4 percent annual rate during the second quarter of 2009, following a contraction of 9.7 percent annual rate in the first quarter.
After declining rapidly between the middle of 2007 and the end of last year, The Conference Board LEI for the Euro Area has rebounded strongly during the past four months. The six-month growth rate in the index has reached its highest rate since 1987 with widespread strengths among its components. Meanwhile, The Conference Board CEI for the Euro Area has continued to decline, albeit at a slower pace in recent months. Taken together, the recent behavior of the composite indexes suggests that the contraction in economic activity should continue to ease in the months ahead and that the economy is moving closer to a recovery.
LEADING INDICATORS
Five of the eight components in The Conference Board LEI for the Euro Area increased in July. The positive contributors - in order from the largest positive contributor to the smallest - are the interest rate spread, the Purchasing Managers' Index (manufacturing), real money supply, the Economic Sentiment Index and stock price index. The negative contributors—in order from largest to smallest - are the business expectations index (services), new orders of capital goods and residential building permits.
With the 1.6 percent increase in July, The Conference Board LEI for the Euro Area now stands at 97.4 (2004=100). Based on revised data, this index increased 1.4 percent in June and increased 1.8 percent in May. During the six-month span through July, the index increased 5.8 percent, with seven of the eight components increasing (diffusion index, six-month span equals 87.5 percent).
COINCIDENT INDICATORS
Three of the four components that make up The Conference Board CEI for the Euro Area increased in July. The positive contributors were manufacturing turnover, retail trade and industrial production. Employment declined in July.
With the 0.1 percent decrease in July, The Conference Board CEI for the Euro Area now stands at 101.0 (2004=100). Based on revised data, this index decreased 0.5 percent in June and decreased 0.2 percent in May. During the six-month period through July, the index decreased 1.9 percent, with none of the four components increasing (diffusion index, six-month span equals 0.0 percent).
