Composite Index of Leading Indicators

What is the 'Composite Index of Leading Indicators'

The Composite Index of Leading Indicators, otherwise known as the Leading Economic Index (LEI), is an index published monthly by the Conference Board used to predict the direction of global economic movements in the months to come. It is made up of 10 economic components, whose changes tend to precede changes in the overall economy. The Conference Board, founded in 1916, is an independent research association that provides its member organizations with economic and financial information.

BREAKING DOWN 'Composite Index of Leading Indicators'

The 10 components of the Composite Index of Leading Indicators are:

1. The average weekly hours worked by manufacturing workers;

2. The average number of initial applications for unemployment insurance;

3. The amount of manufacturers' new orders for consumer goods and materials;

4. The speed of delivery of new merchandise to vendors from suppliers;

5. The amount of new orders for capital goods unrelated to defense;

6. The amount of new building permits for residential buildings;

7. The S&P 500 stock index;

8. The inflation-adjusted monetary supply (M2);

9. The spread between long and short interest rates; and

10. consumer sentiment.

The Composite Index of Leading Indicators is a number used by many economic participants to judge what is going to happen in the near future. By looking at it in relation to business cycles and general economic conditions, investors and businesses can form expectations about what is ahead, and make better-informed decisions.

Global Leading Economic Index Data

As of June 2016, the United States had an LEI of 123.7, which was a 0.3% increase from May 2016. In comparison, Australia's LEI was 102.6, Brazil's LEI was 96.1, China's LEI was 150.6, France's LEI was 112.5, Germany's LEI was 107.5, India's LEI was 101.4, Japan's LEI was 102.4, South Korea's LEI was 110.2, Mexico's LEI was 98.8, Spain's LEI was 104.2 and the United Kingdom's LEI was 114.1, according to the latest figures published in May and June 2016. These values are calculated with a base year of 2010 equaling 100.

Overview of the Conference Board

The Conference Board is served by its board of chairmen and trustees and its voting members, similar to the structure of a private corporation, except no one has any ownership stake in the Conference Board because it is a not-for-profit corporation. In 2016, these positions are filled by many high-ranking executives from corporations including Deutsche Bank, BBVA, John Deere & Company, Johnson & Johnson, Monsanto, British Petroleum, Royal Dutch Shell, MasterCard, General Electric, Novartis and State Farm Insurance.