The Conference Board CEI for the Euro Area, a measure of current economic activity, remained unchanged in October after decreasing slightly in September, according to preliminary estimates. Between April and October 2010, the coincident economic index increased by 0.4 percent (about a 0.8 percent annual rate), in line with the increase of 0.5 percent (about a 1.0 percent annual rate) for the previous six months. Additionally, the strengths among the coincident indicators have been more widespread than weaknesses over the past six months. At the same time, real GDP increased at a 1.5 percent annual rate during the third quarter of 2010, slowing from the growth of 3.9 percent annual rate during the second quarter.
The Conference Board LEI for the Euro Area remains on an upward trend. However, its six-month growth rate has continued to slow, and is now at the lowest pace since the middle of last year. Meanwhile, The Conference Board CEI for the Euro Area has been largely flat since this spring, after mostly increasing since October 2009. The recent behavior of the composite indexes suggests that economic activity should continue to grow, though at a moderate pace in the near term.
LEADING INDICATORS
Six 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 Markit Purchasing Managers' Index (manufacturing), the Economic Sentiment Index, EURO STOXX® Index, new orders of capital goods, and real money supply. The Markit business expectations index (services) made a negative contribution. Residential building permits remained unchanged in October.
With the 0.4 percent increase in October, The Conference Board LEI for the Euro Area now stands at 114.0 (2004=100). Based on revised data, this index increased 0.2 percent in September and increased 0.6 percent in August. During the six-month span through October, the index increased 2.9 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 Conference Board CEI for the Euro Area increased in October. The positive contributors were manufacturing turnover, retail trade, and industrial production. Employment remained unchanged in October.
After remaining unchanged in October, The Conference Board CEI for the Euro Area now stands at 102.5 (2004=100). Based on revised data, this index decreased 0.1 percent in September and increased 0.1 percent in August. During the six-month period through October, the index increased 0.4 percent, with three of the four components increasing (diffusion index, six-month span equals 87.5 percent).
