The Conference Board announced that the leading index for Germany increased 0.8 percent and the coincident index increased 0.3 percent in February.



The leading index increased sharply in February, the third consecutive increase. The leading index grew 0.3 percent (a 0.6 percent annual rate) from August to February. In January and February, all components of the leading index rose, and new orders in investment goods, consumer confidence, and stock prices continued to make the largest positive contributions to the index. In addition, the strengths among the leading indicators have been slightly more widespread than weaknesses in recent months.

The coincident index increased in February, following a decrease in January. This index of current economic activity has been rising steadily and rapidly since mid-2006, continuing to remain on a steady upward trend since 2005. Although its growth rate moderated somewhat in the first two months of the year, the coincident index has been growing at about a 2.0 percent annual rate in recent months. In addition, strengths among the coincident indicators have also been widespread in recent months.

The six-month growth rate of the leading index gradually fell to zero by mid-2006, and it fluctuated between a 0.0 and 1.0 percent rate in the second half of 2006. At the same time, real GDP grew at 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. Despite its recent volatility, the continued widespread improvement in the leading index so far in early 2007 suggests that moderate to somewhat stronger economic growth is to be expected in the near term.

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

With the 0.8 percent increase in February, the leading index now stands at 98.5 (1990=100). Based on revised data, this index increased 0.2 percent in January and increased 0.2 percent in December. During the six-month span through February, the leading index increased 0.3 percent, with four of the eight components increasing (diffusion index, six-month span equals 57.1 percent).

COINCIDENT INDICATORS. All four components that make up the coincident index increased in February. The positive contributors to the coincident index were industrial production, retail trade, employed persons, and manufacturing sales.

With the 0.3 percent increase in February, the coincident index now stands at 108.6 (1990=100). Based on revised data, this index decreased 0.2 percent in January and increased 0.5 percent in December. During the six-month period through February, the coincident index increased 0.8 percent, with three of the four components increasing (diffusion index, six-month span equals 75.0 percent).