Conference Board German business indexes drop slightly

The Conference Board announced December 20 that the leading economic index for Germany declined 0.1 percent and the coincident index decreased 0.1 percent in October.

• The leading index decreased slightly in October, and September's no change was revised up slightly as a result of data revisions. The leading index grew 0.5 percent from April to October (about a 1.0 percent annual rate), and its growth has been fluctuating around a 1.0 percent annual rate in recent months, but this is down from a very rapid rate of 5.0 to 6.0 percent annual rate in the first quarter of 2006. In addition, although the strengths among the leading indicators have become somewhat less widespread, strengths and weaknesses have been fairly balanced in recent months.
• The coincident index also decreased slightly in October, following a slight increase in September. Positive contributions from employment and manufacturing sales were offset by larger negative contributions from retail trade and industrial production. At the same time, real gross domestic product grew at a 2.6 percent annual rate in the third quarter of 2006, down from the 3.8 percent average annual rate in the first half of 2006. The recent behavior of the leading index still suggests that moderate economic growth is likely to continue in the near term.
  

Leading indicators: Three of the eight components in the leading index increased in October. The positive contributors to the leading index - in order from the largest positive contributor to the smallest - are stock prices, gross enterprises and properties income, and the inventory change series. Negative contributors - in order from largest to smallest - are new orders in investment goods industries, yield spread, the growth rate of CPI for services, and new residential construction orders. Consumer confidence remained unchanged in October.

With the 0.1 percent increase in October, the leading index now stands at 107.3 (1990=100). Based on revised data, this index increased 0.1 percent in September and increased 0.5 percent in August. During the six-month span through October, the leading index increased 0.5 percent, with five of the eight components increasing (diffusion index, six-month span equals 62.5 percent).

Coincident indicators: Two of the four components that make up the coincident index increased in October. The positive contributors to the coincident index were employed persons, and manufacturing sales. Retail trade and industrial production declined in October.

With the 0.1 percent decrease in October, the coincident index now stands at 106.8 (1990=100). Based on revised data, this index increased 0.1 percent in September and increased 0.1 percent in August. During the six-month period through October, the coincident index increased 1.2 percent, with all of the four components increasing (diffusion index, six-month span equals 100.0 percent).

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.

                    Summary Table of Composite Indexes
                                 2006                    6-month
                   Aug           Sep          Oct         Apr to
                                                           Oct

  Leading index    107.3         107.4  p     107.3  p
    Percent Change   0.5           0.1  p      -0.1  p      0.5  p
    Diffusion       62.5          56.3         43.8        62.5

  Coincident Index 106.8         106.9  r      106.8
   Percent Change    0.1           0.1  r       -0.1        1.2
   Diffusion        75.0          75.0          50.0      100.0

  n.a.  Not available     p  Preliminary     r  Revised
  Indexes equal 100 in 1990