The Conference Board Leading Economic Index® (LEI) for the Euro Area increased 0.5 percent in January to 107.5 (2004 = 100), following a 0.7 percent increase in December and a 0.7 percent increase in November.

The Conference Board LEI for the Euro Area increased again in January, as the interest rate spread, the Markit business expectations index (services), stock prices, and money supply made positive contributions to the index. Index levels in recent months were revised slightly lower due to downward revisions in building permits and real money supply. Between July 2010 and January 2011, the leading economic index increased by 2.1 percent (about a 4.2 percent annual rate), slower than the growth of 3.4 percent (about a 7.0 percent annual rate) during the previous six months. However, the strengths among the leading indicators have been widespread in recent months.

The Conference Board CEI for the Euro Area, a measure of current economic activity, remained unchanged in January, according to preliminary estimates. During the last six months, the coincident economic index increased by 0.2 percent (about a 0.4 percent annual rate), below the growth of 0.6 percent (about a 1.2 percent annual rate) between January and July 2010. In addition, the strengths and weaknesses among the coincident indicators have only been balanced during the last six months. At the same time, real GDP increased at a 1.2 percent annual rate in the final quarter of 2010, following growth of 1.4 percent annual rate in the third quarter and 4.1 percent annual rate in the second quarter.

The Conference Board LEI for the Euro Area remains on an upward trend, which began in April 2009. However, its six-month growth rate moderated this month, after picking up late last year. Meanwhile, The Conference Board CEI for the Euro Area has also been generally rising since reaching a trough in October 2009, though the index was flat in recent months. Taken together, the recent behavior of the composite indexes suggests that economic activity should continue to grow, albeit at a moderate pace in the near term.

LEADING INDICATORS.

Five of the eight components in The Conference Board LEI for the Euro Area increased in January. The positive contributors - in order from the largest positive contributor to the smallest - are the interest rate spread, the Markit business expectations index (services), the EURO STOXX® Index, real money supply, and the Markit Purchasing Managers' Index (manufacturing). Negative contributors - in order from largest to smallest - are new orders of capital goods, residential building permits, and the Economic Sentiment Index.

With the 0.5 percent increase in January, The Conference Board LEI for the Euro Area now stands at 107.5 (2004=100). Based on revised data, this index increased 0.7 percent in December and increased 0.7 percent in November. During the six-month span through January, the index increased 2.1 percent, with six of the eight components increasing (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS

One of the four components that make up The Conference Board CEI for the Euro Area increased in January. The positive contributor was retail trade. Manufacturing turnover and employment declined in January while industrial production remained unchanged.

After remaining unchanged in January, The Conference Board CEI for the Euro Area now stands at 102.6 (2004=100). Based on revised data, this index remained unchanged in December and increased 0.1 percent in November. During the six-month period through January, the index increased 0.2 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).