The Conference Board Leading Economic Index® (LEI) for Germany increased 0.4 percent and The Conference Board Coincident Economic Index® (CEI) increased 0.4 percent in January.

The Conference Board LEI for Germany increased again in January. The yield spread and new orders for investment goods continued to make large positive contributions to the index this month, more than offsetting the declines in consumer confidence and new orders in residential construction. Between July 2010 and January 2011, the leading economic index increased 3.8 percent (a 7.7 percent annual rate), slower than the increase of 6.1 percent (a 12.5 percent annual rate) during the previous six-month period. However, the strengths among the leading indicators have remained widespread in recent months.

The Conference Board CEI for Germany, a measure of current economic activity, increased as well in January, with all four components advancing. After slowing through November 2010, the six-month change in the index has improved recently – to 1.1 percent (a 2.1 percent annual rate) in the period through January 2011, though it is still below the growth of 2.0 percent (a 4.0 percent annual rate) between January and July 2010. However, the strengths among the coincident indicators have remained widespread during the past six months. Meanwhile, real GDP increased at a 1.5 percent annual rate in the final quarter of 2010, following an increase of 2.8 percent in the third quarter.

The Conference Board LEI for Germany has been on a rising trend for almost two years now, amid widespread strength among its components. However, its six-month growth rate has moderated from the middle of last year. Meanwhile, The Conference Board CEI for Germany has risen strongly for the past couple of months, after remaining essentially flat in the third quarter of 2010. Taken together, the recent behavior of the composite indexes suggests that economic activity should continue expanding at a moderate pace in the near term.

LEADING INDICATORS

Five of the seven components in The Conference Board LEI for Germany increased in January. The positive contributors - in order from the largest positive contributor to the smallest - were the yield spread, new orders in investment goods industries, stock prices, inventory change, and gross enterprises and properties income. The negative contributors - in order from the larger one - were consumer confidence and new residential construction orders.

With the 0.4 percent increase in January, The Conference Board LEI for Germany now stands at 106.8 (2004=100). Based on revised data, this index increased 0.4 percent in December and increased 0.8 percent in November. During the six-month span through January, the index increased 3.8 percent, with six of the seven components increasing (diffusion index, six-month span equals 85.7 percent).

COINCIDENT INDICATORS

All four components that make up The Conference Board CEI for Germany increased in January. The positive contributors - in order from the largest positive contributor to the smallest - were manufacturing sales, industrial production, employed persons, and retail trade.

With the 0.4 percent increase in January, The Conference Board CEI for Germany now stands at 105.3 (2004=100). Based on revised data, this index increased 0.3 percent in December and remained unchanged in November. During the six-month period through January, the index increased 1.1 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).