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EMBARGOED FOR RELEASE: 3:30 P.M. CET (Germany), Thursday, APRIL 26, 2001

The Press Release in a PDF file


The leading index decreased 0.6 percent in March, and the coincident index remained unchanged. Taken together, the composite indexes show continued weakness in the German economy.

  • The leading index continued on a sharp downward trend since its peak in February of last year, an indication that further weakness in the coincident index is likely in the coming months.
  • With the March data, the coincident index has remained essentially flat for the past six months, in contrast to the rapid growth in the index earlier last year.

LEADING INDICATORS. Eight of the nine components of the leading index decreased in March. The negative contributors to the leading index -in order from the largest negative contributor to smallest- are stock prices, growth rate of CPI Services, inventory change, consumer confidence index, new orders in investment goods industries, the yield spread, new residential construction orders, and gross enterprises and properties income. The inverted applications for unemployment compensation is the only component which increased in March. (For details see data availability section and tables).

With the decrease of 0.6 percent in March, the leading index now stands at 103.7 (1990=100). Based on revised data, this index decreased 0.6 percent in February and decreased 0.5 percent in January. During the six-month span through March, the leading index declined 2.0 percent, and only two of the nine components increased (diffusion index, six-month span equals 22.2 percent).

The next release is scheduled for May 29, 2001 at 3:30 P.M. CET (Germany)

COINCIDENT INDICATORS. Three of the four components of the coincident index increased in March. The increases are in industrial production, manufacturing sales, and retail trade. The unemployment rate held steady in March. (For details see data availability section and tables).

With no change in March, the coincident index stands at 101.8 (1990=100). Based on revised data, this index increased 0.1 percent in February, and increased 0.2 percent in January. During the six-month period through March, the coincident index increased 0.2 percent, with three of four series making positive contributions (diffusion index, six-month span equals 75 percent).

DATA AVAILABILITY. The data series used to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. CET (Germany) on April 25, 2001. At the time of the release, recent data for several of the series were based on estimates. In the leading index, recent data for new orders for investment goods industries, applications for unemployment compensation, consumer confidence, inventory change, new residential construction orders, and gross enterprises and properties income were based on estimates. In the coincident index, recent data for industrial production, manufacturing sales and retail trade were also based on estimates.

Professional Contacts at The Conference Board:
Ataman Ozyildirim: 1-212-339-0399
Mike Fort: 1-212-339-0402
Bart Van Ark: 31-50-363-3674

Media Contacts:
Randy Poe: 1-212-339-0234
Frank Tortorici: 1-212-339-0231


THE CYCLICAL INDICATOR APPROACH. The composite indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading and coincident indexes are essentially composite averages of between four and nine individual leading or coincident indicators. (See page 3 for details.) They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component-primarily because they smooth out some of the volatility of individual components.

Historically, the cyclical turning points in the leading index have occurred before those in aggregate economic activity, while the cyclical turning points in the coincident index have occurred at about the same time as those in aggregate economic activity.

A change in direction in a composite index does not signal a cyclical turning point unless the movement is of significant size, duration, and scope. Historical analysis with U.S. data shows recession warnings are best determined by looking for negative growth of about 3.5 percent, coupled with declines in at least half of the components over a six-month span. Further explanations of the cyclical indicator approach and the composite index methodology appear in The Conference Board's Business Cycle Indicators report and Web site:

Germany Composite Indexes: Components and Standardization Factors
 Leading IndexFactor
1.New Orders, Investment Goods.0604
2.Applications for Unemployment Compensation.0283
3.Yield Spread, 10 year minus 3 month.3379
4.Change in Inventories.0993
5.Gross Enterprise and Property Income.0835
6.Stock Prices.0302
7.New Orders, Residential Construction.0415
8.Growth Rate for Consumer Price Index for Services.2067
9.Consumer Confidence Index.1122

Coincident Index
1.Manufacturing Sales.0591
2.Industrial Production.1018
3.Retail sales.0963
4.Unemployment Rate.7428

The component factors are inversely related to the standard deviation of the month-to-month changes in each component. They are used to equalize the volatility of the contribution from each component and are "normalized" to sum to 1. These factors were revised effective with January 30, 2001 release, and all historical values for the two composite indexes have been revised at the time to reflect the changes. (Under normal circumstances, updates to the leading and coincident indexes only incorporate revisions to data over the past six months.)

The factors above were calculated using 1973-1999 as the sample period for measuring volatility for the leading index, and 1960-1999 as the sample period for the coincident index. There are additional sample periods as the result of different starting dates for the component data. When one or more components is missing, the other factors are adjusted proportionately to ensure that the total continues to sum to 1. For additional information on the standardization factors and the index methodology visit our Web site:

To address the problem of lags in available data, those leading and coincident indicators that are not available at the time of publication are estimated using statistical imputation. An autoregressive model is used to estimate each component. The resulting indexes are constructed using real and estimated data, and will be revised as the data unavailable at the time of publication become available. Such revisions are part of the monthly data revisions, now a regular part of the U.S. Business Cycle Indicators program. The main advantage of this procedure is to utilize in the leading index the data, such as stock prices, that are available sooner than other data on "real" aspects of the economy, such as new orders and changes in inventory. Empirical research by The Conference Board suggests there are real gains in adopting this procedure to make all the indicator series as up-to-date as possible.


The schedule for 2000 for the "Leading Economic Indicators" news release is:
April 2001 data … Tuesday May 29, 2001
May 2001 data … Thursday June 28, 2001

As of January 2001, all components of the leading and coincident indexes have incorporated annual benchmark revisions. For detailed information on benchmark revisions, visit out website:

All releases are at 3:30 PM CET (Germany).

The Conference Board is a worldwide research and business membership group, with more than 3,000 corporate and other members in 67 nations. One of the leading private sources of economic and business intelligence, The Conference Board is a not-for-profit, non-advocacy organization. For more information about The Conference Board-especially to learn about networking opportunities through our conferences, councils, and meetings or to order a wide range of reports on best business practices and economic and public policy issues- visit our website at, or email us at

In December 1995, The Conference Board assumed responsibility for computing the composite indexes in the "Leading Economic Indicators" news release from the U.S. Department of Commerce, which is in keeping with its mission to improve the business enterprise system and to enhance the contribution of business to society.

The Conference Board produces a monthly report called Business Cycle Indicators and corresponding electronic datafiles that highlight the U.S. composite indexes and offer a wealth of additional statistical information gathered together in a common format. More than 250 U.S. economic series are in the BCI dataset, covering the most important aspects and sectors of the U.S. economy. An international dataset that will include the underlying data used to compute the global indicators will be available by subscription on our Web site. Visit the BCI Web site at or send e-mail to for more information.

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