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This month's release incorporates benchmark revisions to the composite indexes. With this release, the composite indexes are changed in composition and up-to-dated with revisions in component data. As a result the indexes will no longer be comparable to those issued prior to this benchmark revision.

For more information, visit our website at .

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

  • The modest increase in the leading index in September comes after the index declined sharply by more than 1.6 percent in the preceding two months. Since last March, the index has declined 1.0 percent, with only half of its components increasing during that period. While the downward trend in the leading index appears to have moderated, the recent volatility is a cause for concern for German economic growth in the coming months.
  • The coincident index, a measure of current economic activity, increased for the second consecutive month. Improvements in employment and retail trade contributed to the strength in the coincident index during September.

LEADING INDICATORS. Three of the eight components in the leading index increased in September. The positive contributors to the leading index -in order from the largest to the smallest positive contributor- include consumer confidence, growth rate of CPI services and inventory change series*. The negative contributors to the leading index -in order from the largest negative contributor to the smallest- include stock prices, the yield spread, new residential construction orders*, gross enterprises and properties income* and new orders in investment goods industries.

With the increase of 0.1 percent in September, the leading index now stands at 101.4 (1990=100). Based on revised data, this index decreased 0.8 percent in August and decreased 0.9 percent in July. During the six-month span through September, the leading index decreased 1.0 percent, with four of the eight components increasing (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in September. The positive contributors to the leading index -in order from the largest to the smallest positive contributor- include retail trade sales, the number of employed people and manufacturing sales*. Industrial production was unchanged during September.

With the increase of 0.2 percent in September, the coincident index now stands at 111.5 (1990=100). Based on revised data, this index increased 0.5 percent in August and decreased 0.3 percent in July. During the six-month period through August, the coincident index increased 0.1 percent, with three of four series making positive contributions (diffusion index, six-month span equals 75.0 percent).

* See notes under data availability.

The next release is scheduled for December 19, 2002 at 9:30 A.M. (ET)
In Germany -December 19, 2002 at 3:30 P.M. (CET)

NOTES: Series in the leading index that are based on The Conference Board estimates are inventory change, new residential construction orders and gross enterprises and properties income. Series in the coincident index that are based on The Conference Board estimates is manufacturing sales.

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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:
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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.

Germany Composite Indexes: Components and Standardization Factors
 Leading IndexFactor
1.New Orders, Investment Goods.0477
2.Yield Spread, 10 year minus 3 month.4191
3.Change in Inventories.1590
4.Gross Enterprise and Property Income.0967
5.Stock Prices.0408
6.New Orders, Residential Construction.0697
7.Growth Rate for Consumer Price Index for Services.0328
8.Consumer Confidence Index.1341

Coincident Index
1.Manufacturing Sales.0591
2.Industrial Production.1018
3.Retail sales.0963

The standardization 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 are revised effective with the November 19, 2002 release, and all historical values for the two composite indexes have been revised to reflect these 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 1992-2000 as the sample period for measuring volatility for the leading index, and 1991-2000 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 next release is scheduled for December 19, 2002 at 9:30 A.M. (ET)

With annual benchmark revisions in January 2001, all components of the leading and coincident indexes were updated with all revisions in the underlying component data.

For detailed information on benchmark revisions, visit our website:

ABOUT THE CONFERENCE BOARD. Founded in 1916, The Conference Board is the premier business membership and research network. The Conference Board has become a global leader in helping executives build strong professional relationships, expand their business knowledge and find solutions to a wide range of business challenges. The Board's Economics Program, under the direction of Chief Economist Gail Fosler, is a recognized source of forecasts, economic analysis and objective indicators such as the Leading Economic Indicators and the Consumer Confidence Index.

This role is part of a long tradition of research and education that stretches back to the compilation of the first continuous measure of the cost of living in the United States in 1919. In 1995, The Conference Board assumed responsibility for computing the composite indexes from the U.S. Department of Commerce. The Conference Board now produces business cycle indexes for the U.S., Australia, France, Germany, Korea, Japan, Mexico, Spain and the U.K. To subscribe to any of these indexes, please visit or contact the Global Indicators Research Institute at 212-339-0330 or email


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