The composite leading economic indicator (LEI) exhibited a downward direction in the first quarter of 2014, posting 0.037 from a revised 0.141 in the fourth quarter of 2013. This indicates that the country’s economic activity may slow down during the quarter.
Figure 1 below shows the direction of the composite LEI vis-Ãƒ -vis the movement of the cycle component of the reference series - the Non-Agriculture gross value added (GVA).
Figure 1. Composite leading economic indicator (LEI) versus
the Non-Agriculture GVA cycle
Of the 11 indicators that make up the composite LEI, three contributed positively. The positive contributors include, starting with the largest positive contributor: (1) number of new businesses, (2) terms of trade index, and (3) consumer price index. The combined share of positive contributors for this quarter accounted for 27.3 percent of the total contribution, decreasing from 77.6 percent in the fourth quarter of 2013.
On the other hand, the negative contributors, beginning with the largest negative contributor, are: (1) total merchandise imports, (2) stock price index, (3) money supply, (4) visitor arrivals, (5) foreign exchange rate, (6) electric energy consumption, (7) wholesale price index, and (8) hotel occupancy rate. The negative contributors accounted for 72.7 percent of the total contribution.
For the Q1 2014 LEI, seven indicators shifted direction in contribution from the fourth quarter of 2013, namely: electric energy consumption, hotel occupancy rate, total merchandise imports, money supply, stock price index, and wholesale price index, all from positive to negative and consumer price index, from negative to positive.
The contribution of each of the 11 indicators is measured through the combined effects of: (1) the direction (the slope or change) of the cycle component of each indicator, and (2) the correlation of their cycle components with that of the reference series. Table 1 below shows the composite LEI estimates and the corresponding slopes for the period first quarter 2001 to first quarter 2014.
Table 1. Composite Leading Economic Indicator (LEI)
Q1 2001 to Q1 2014
Details of the LEI computation procedure, information about the component leading indicators, and limitations on the methodology and latest data are available at the Technical Notes section.
CARMELITA N. ERICTA
OIC National Statistician