The Conference Board Inc.

09/17/2024 | Press release | Distributed by Public on 09/17/2024 09:24

LEI for Australia Inched Up in July

For Release 10:30 AM ET, September 17, 2024

Using the Composite Indexes: The Leading Economic Index (LEI) provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The Coincident Economic Index (CEI) provides an indication of the current state of the economy. Additional details are below.

The Conference Board Leading Economic Index® (LEI) for Australia ticked up by 0.1 percent in July 2024 to 112.1 (2016=100), a partial reversal of the revised decrease of 0.2 percent in June. The LEI fell by 2.3 percent over the six-month period from January to July 2024, a significantly faster rate of contraction than the 1.0 percent decline over the previous six-month period between July 2023 and January 2024.

The Conference Board Coincident Economic Index® (CEI) for Australia increased by 0.3 percent in July 2024 to 115.8 (2016=100), after a downwardly revised 0.2 percent increase in June. Overall, the CEI grew by 1.0 percent over the six-month period from January to July 2024, up from the 0.3 percent increase over the previous six-month period.

"The LEI for Australia ticked up slightly in July, marking the first increase in the Index since November 2023" said Ian Hu, Economic Research Associate at The Conference Board. "Positive contributions from share prices, rural goods exports, and the money supply narrowly offset the large negative contribution from the sales-to-inventory ratio, which has been on a slight downward trend since its all-time peak in August 2021. Furthermore, the semiannual change to the LEI, while more negative than six months ago, showed some slight improvement compared to May and June readings. All of it is possibly pointing towards lessened economic challenges and a potential for higher growth in the second half of 2024. Overall, The Conference Board currently forecasts Australia's annual real GDP growth to be weaker than last year and reach around 1.3 percent in 2024."

The next release is scheduled for Wednesday, October 16, 2024, at 10:30 A.M. ET.

The Australia LEI inched up in July

Financial components, alongside rural exports, fueled the slight increase to the LEI

Improvement in the Australia LEI's semiannual growth rate turn off the recession signal in July

NOTE: The chart illustrates the so-called 3Ds-duration, depth, and diffusion-for interpreting a downward movement in the LEI. Duration refers to how long the decline has lasted. Depth denotes the size of decline. Duration and depth are measured by the rate of change of the index over the most recent six months. Diffusion is a measure of how widespread the decline is among the LEI's component indicators-on a scale of 0 to 100, a six-month diffusion index reading below 50 indicates most components are weakening.

The 3Ds rule signals an impending recession when: 1) the six-month diffusion index lies below 50, shown by the black warning signal lines in the chart; and 2) the LEI's six-month rate of decline falls below the threshold of −2.9 percent. The red recession signal lines indicate months when both criteria are met simultaneously-and thus that a recession is likely imminent or underway.

About The Conference Board Leading Economic Index®(LEI) and Coincident Economic Index® (CEI) for Australia

The composite economic indexes are key elements in an analytic system designed to signal peaks and troughs in the business cycle. Comprised of multiple independent indicators, the indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component.

The CEI reflects current economic conditions and is highly correlated with real GDP. The LEI is a predictive tool that anticipates-or "leads"-turning points in the business cycle by around seven months.

The seven components of Leading Economic Index®for Australia are:

  • Yield Spread, 10Y - Policy Rate
  • Share Prices, All Ordinaries S&P/ASX 200
  • Money Supply, M3
  • Building Approvals
  • Rural Goods Exports
  • Non-Farm Sector, Sale to Inventories Ratio
  • Gross Operating Surplus, Private Non-Financial Corp.

The four components of the Coincident Economic Index® for Australia are:

  • Employment
  • Household Income
  • Industrial Production
  • Retail Trade

To access data, please visit: https://data-central.conference-board.org/


About The Conference Board

The Conference Board is the member-driven think tank that delivers Trusted Insights for What's Ahead™. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. ConferenceBoard.org