The Conference Board Leading Economic Index™ (LEI) for the Euro Area increased 0.9 percent in October to 101.4 (2004 = 100), following a 1.0 percent increase in September and a 1.9 percent increase in August. Five of the eight components contributed positively to the index this month. However, its six-month growth rate slowed slightly in October.

The Conference Board LEI for the Euro Area increased again in October with the yield spread and the Economic Sentiment Index continuing to make the largest positive contributions, but the strengths among its components have become slightly less widespread. Between April and October 2009, the leading economic index increased by 8.9 percent (about an 18.6 percent annual rate) with extensive gains among its components, a sharp reversal from the earlier declines, but lower than the 10.2 percent increase (about a 21.4 percent annual rate) between March and September 2009.

The Conference Board CEI for the Euro Area declined slightly for a second consecutive month in October according to preliminary estimates. Between April and October 2009, the coincident economic index decreased by 0.5 percent (about a -1.0 percent annual rate), much slower than the 2.6 percent decline (about a -5.1 percent annual rate) during the previous six months.

Additionally, the strengths and weaknesses among the coincident indicators have remained balanced in recent months. At the same time, real GDP grew at a 1.5 percent annual rate during the third quarter of 2009, its first increase since the first quarter of 2008.

After declining rapidly from the middle of 2007 through the end of last year, The Conference Board LEI for the Euro Area has rebounded sharply since March, but its rate of increase appears to be stabilizing. The six-month growth for the index has remained near its highest rate since 1987 (reached last month). Meanwhile, the decline in The Conference Board CEI for the Euro Area has slowed and many of its components are gaining strength. Taken together, the recent behavior of the composite economic indexes suggests that the downturn in economic activity is bottoming out and that economic conditions will continue to improve in the near term.

LEADING INDICATORS

Five of the eight components in The Conference Board LEI for the Euro Area increased in October. The positive contributors - in order from the largest positive contributor to the smallest - are the interest rate spread, the Economic Sentiment Index, the Markit Purchasing Managers' Index (manufacturing), real money supply and the Dow Jones EURO STOXX® Index. The negative contributors - in order from largest to smallest - are the Markit business expectations index (services), new orders of capital goods and residential building permits.

With the 0.9 percent increase in October, The Conference Board LEI for the Euro Area now stands at 101.4 (2004=100). Based on revised data, this index increased 1.0 percent in September and increased 1.9 percent in August. During the six-month span through October, the index increased 8.9 percent, with seven of the eight components increasing (diffusion index, six-month span equals 87.5 percent).

COINCIDENT INDICATORS

Two of the four components that make up The Conference Board CEI for the Euro Area increased in October. The positive contributors were retail trade and manufacturing turnover. Employment declined in October while industrial production remained unchanged.

With the 0.1 percent decrease in October, The Conference Board CEI for the Euro Area now stands at 101.6 (2004=100). Based on revised data, this index decreased 0.2 percent in September and remained unchanged August. During the six-month period through October, the index decreased 0.5 percent, with two of the four components increasing (diffusion index, six-month span equals 50.0 percent).