The coincident index, a measure of current economic conditions, remained unchanged in March after picking up somewhat in early 2008 following steady increases throughout 2007. In March, small declines in industrial production, retail trade and manufacturing sales were offset by gains in employed persons. Over the past six months, the coincident index has increased by 1.1 percent (about a 2.2 percent annual rate), above the 0.6 percent rate for the previous six months (about a 1.3 percent annual rate). In addition, the strengths among the coincident indicators have remained more widespread than the weaknesses in recent months.
After fluctuating around a slightly rising trend from February 2006 through July 2007, the leading index has been in a steep decline during the past eight months. The coincident index has continued to grow at a steady pace in recent months, though not as fast as in the first quarter of 2007. At the same time, real GDP growth has increased from a 1.7 percent average annual growth rate for the second and third quarters of 2007 to a 3.6 percent average annual rate for the last two quarters (including a 6.3 percent annual rate for the first quarter of 2008). The leading index has weakened since mid-2007 suggesting that although the German economy is still likely to continue expanding, the recent pick up in economic growth is not likely to last in the near term.
LEADING INDICATORS
Four of the seven components in the leading index increased in March. The positive contributors to the leading index - in order from the largest positive contributor to the smallest - are consumer confidence, new residential construction orders, gross enterprises and properties income, and inventory change series. Negative contributors - in order from largest to smallest - are stock prices, new orders in investment goods industries, and yield spread.
With the 0.6 percent decrease in March, the leading index now stands at 96.8 (1990=100). Based on revised data, this index declined 0.7 percent in February and declined 0.9 percent in January. During the six-month span through March, the leading index decreased 2.1 percent, with two of the eight components increasing (diffusion index, six-month span equals 28.6 percent).
COINCIDENT INDICATORS
One of the four components that make up the coincident index increased in March. The positive contributor to the coincident index was employed persons. Industrial production, manufacturing sales, and retail trade declined in March.
After remaining unchanged in March, the coincident index now stands at 111.0 (1990=100). Based on revised data, this index increased 0.3 percent in February and increased 0.5 percent in January. During the six-month period through March, the coincident index increased 1.1 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).
