The Conference Board announced today that the leading index for Germany increased 0.2 percent and the coincident index decreased 0.1 percent in January.



The leading index increased in December and January, following two large declines in the previous months. The leading index remained essentially flat from July to January. In January, consumer confidence and stock prices continued to make the largest positive contributions to the index. In addition, the strengths and weaknesses among the leading indicators have been roughly balanced in recent months, with the number of components rising only slightly more than those falling.

The coincident index decreased slightly in January, following three consecutive increases. In January, a very large negative contribution from retail sales (reversing a large gain in December) more than offset positive contributions from industrial production, manufacturing sales, and employment. However, the strengths among the coincident indicators have been widespread in recent months.

After reaching over 6.0 percent (annual rate) at the beginning of 2006, the six-month growth rate of the leading index gradually fell to zero by mid-2006, and despite a brief pick up in September (to about a 2.3 percent rate), it has been fluctuating in the range of 0.0 to 1.0 percent rate in the second half of 2006. At the same time, real GDP growth was revised down to a 3.5 percent annual rate in the fourth quarter of 2006 (a 3.4 percent average annual rate in the second half of the year), slightly below the 4.1 percent average annual rate in the first half of the year. The behavior of the composite indexes still suggests that moderate economic growth is likely to continue in the near term.

LEADING INDICATORS. Six of the seven components in the leading index increased in January. The positive contributors to the leading index — in order from the largest positive contributor to the smallest — are stock prices, consumer confidence, new orders in investment goods industries, inventory change series*, yield spread, and gross enterprises and properties income*. New residential construction orders declined in January.

With the 0.2 percent increase in January, the leading index now stands at 97.6 (1990=100). Based on revised data, this index increased 0.1 percent in December and declined 0.4 percent in November. During the six-month span through January, the leading index remained unchanged (0.0 percent), with four of the eight components increasing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in January. The positive contributors to the coincident index were industrial production, manufacturing sales, and employed persons. Retail trade declined in January.

With the 0.1 percent decrease in January, the coincident index now stands at 108.2 (1990=100). Based on revised data, this index increased 0.4 percent in December and increased 0.3 percent in November. During the six-month period through January, the coincident index increased 0.7 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).