The Conference Board CEI for the Euro Area, a measure of current economic activity, remained unchanged in August, according to preliminary estimates. Index levels were revised upwards between March and July as a result of revisions to employment data. Between February and August 2011, the coincident economic index increased 0.4 percent (about a 0.8 percent annual rate), slightly below the growth of 0.5 percent (about a 1.0 percent annual rate) during the previous six months. However, the strengths and weaknesses among the coincident indicators have remained only balanced in recent months. Meanwhile, real GDP increased at a 0.6 percent annual rate in the second quarter of 2011, slowing from the 3.1 percent (annual) rate in the previous quarter.
The Conference Board LEI for the Euro Area declined sharply in August, the fourth decline in the last six months and its largest monthly fall since December 2008. As a result, the index is now 1.4 percent below its pre-recession peak in June 2007. Meanwhile, The Conference Board CEI for the Euro Area remained unchanged in August, following a modest gain in July. Taken together, the recent behavior of the composite indexes suggests that risks to future economic growth are increasing and that a slowdown in economic activity in the near term, and perhaps even a contraction, cannot be ruled out.
LEADING INDICATORS
Two of the eight components in The Conference Board LEI for the Euro Area increased in August. The positive contributors - in order from the largest positive contributor to the smallest - were the interest rate spread and real money supply. The negative contributors - in order from largest to smallest - were the EURO STOXX® Index, the Economic Sentiment Index, the Markit business expectations index (services), and the Markit Purchasing Managers' Index (manufacturing). New orders of capital goods and residential building permits remained unchanged in August.
With the 1.4 percent decrease in August, The Conference Board LEI for the Euro Area now stands at 107.1 (2004=100). Based on revised data, this index increased 0.1 percent in July and declined 0.2 percent in June. During the six-month span through August, the index decreased 1.7 percent, with three of the eight components increasing (diffusion index, six-month span equals 37.5 percent).
COINCIDENT INDICATORS
One of the four components that make up The Conference Board CEI for the Euro Area increased in August. The only positive contributor to the index this month was employment. Manufacturing turnover and retail trade declined while industrial production remained unchanged in August.
After remaining unchanged in August, The Conference Board CEI for the Euro Area stands at 103.4 (2004=100). Based on revised data, this index increased 0.3 percent in July and remained unchanged in June. During the six-month period through August, the index increased 0.4 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).
