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FOR RELEASE: 9:30 A.M. ET, THURSDAY, MARCH 20, 2003

GERMANY COMPOSITE INDEXES FOR JANUARY 2003

The Press Release in a PDF file

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

  • The slight decline in the leading index in January follows no change in December and a slight increase in November. A sharp drop in stock prices was responsible for January's decline in the leading index. Overall, weakness in the leading indicators has become less widespread in recent months.
  • The downward trend in the leading index appears to have paused recently. The leading index has now been approximately flat for three months after declining sharply from last June to October.
  • After falling for five months, the coincident index, a measure of economic activity, increased in January with employment and industrial production showing improvements. Additional months are needed for clarification, but taken together, the composite indexes suggest economic growth in Germany may stabilize in the first half of 2003 after falling at the end of 2002.

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

The leading index now stands at 100.5 (1990=100). Based on revised data, this index was unchanged in December and increased 0.1 percent in November. During the six-month span through January, the leading index decreased -1.7 percent, with two of the eight components increasing (diffusion index, six-month span equals 25.0 percent).

COINCIDENT INDICATORS. All four components that make up the coincident index increased in January. The positive contributors to the coincident index -in order from the largest positive contributor to the smallest- are employment, industrial production, retail trade sales and manufacturing sales*. With the increase of 0.2 percent in January, the coincident index now stands at 109.7 (1990=100). Based on revised data, this index decreased 0.4 percent in December and decreased 0.3 percent in November. During the six-month period through January, the coincident index decreased 1.8 percent, with only one of its four components making a positive contribution (diffusion index, six-month span equals 25.0 percent).

The next release is scheduled for April 23, 2003 at 9:30 A.M. (ET)
In Germany -April 23, 2003 at 3:30 P.M. (CET)

DATA AVAILABILITY, The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 9 A.M. ET on March 19, 2003. Some series are estimated as noted below.

NOTES: Series in the composite indexes for Germany that are based on The Conference Board estimates are inventory change, new residential construction orders, gross enterprises and properties income, new orders in the investment goods industry and manufacturing sales.

# # #

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

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

Email: indicators@conference-board.org
Website: http://www.globalindicators.org


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
4.Employment.7428

Notes:
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: www.globalindicators.org.

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.


NOTICES

Release Schedule:

Wednesday, April 2003..... February 2003 Data

Notes: With annual benchmark revisions in June 2002, 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: www.globalindicators.org

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 www.globalindicators.org or contact the Global Indicators Research Institute at 212-339-0330 or email indicators@conference-board.org.

AVAILABLE FROM THE CONFERENCE BOARD:

Germany Business Cycle Indicators Internet Subscription $ 500 per year (1 user)
(Includes monthly release, data, charts and commentary)
Individual Data Series $ 15 per series downloaded
Monthly BCI Report $ 130 per year
(Sample available on request)
Monthly News Release (fax or email) $ 45 per year
BCI Handbook (published 2001) $ 20
Corporate Site License $2,600 per year

Business Cycle Indicators for France, Germany, Japan, Korea, Mexico, Spain and the U.K. are available at $500 per country per year (1 user). Discounts are available to Associates of The Conference Board and accredited academic institutions.