Leading Economic Indicators (LEI)
Track Composite Leading Indicators across major economies to anticipate business cycle turning points 6-12 months ahead.
Last update: --Current LEI Status
How to Read the LEI
Historical LEI by Country
Select Countries to Display
LEI Comparison Table
| Country | Latest Value | 1M Change | 3M Change | 12M Change | Trend | Phase |
|---|
Understanding Leading Economic Indicators
What is a Leading Indicator?
A leading indicator is an economic metric that tends to change before the overall economy changes direction. Unlike coincident indicators (which move with the economy) or lagging indicators (which follow), leading indicators provide early warning signals of turning points.
These indicators typically lead the business cycle by 6-12 months, giving investors and policymakers time to prepare for economic shifts.
When LEI values start declining while the economy is still growing, it often signals that a slowdown or recession is approaching. Conversely, rising LEI during a recession suggests recovery is on the horizon.
OECD Composite Leading Indicator (CLI)
The OECD CLI is designed to provide early signals of turning points in business cycles. It is normalized so that:
- 100 = long-term trend (normal economic activity)
- >100 = above-trend growth (expansion)
- <100 = below-trend growth (contraction)
The CLI is constructed from economic time series that exhibit leading properties relative to GDP, such as:
- Orders and inventory data
- Building permits
- Business confidence surveys
- Interest rate spreads
- Stock prices
How is the CLI Calculated?
The OECD uses a sophisticated methodology to construct the Composite Leading Indicator:
Economic series are selected based on their leading properties relative to a reference series (usually GDP or industrial production). Components must show consistent lead times and economic significance.
Long-term trends are removed using the Hodrick-Prescott filter or similar techniques. This isolates the cyclical component that moves around the long-term trend.
Each component is normalized to have zero mean and unit standard deviation over the sample period. This ensures no single component dominates the composite.
Normalized components are combined (usually equal-weighted) to create the composite indicator. The result is then re-scaled so the long-term average equals 100.
The "amplitude-adjusted" version (shown here) scales the indicator so its amplitude matches that of the reference series, making cross-country comparisons more meaningful.
How to Interpret LEI Signals
Expansion (LEI > 100, Rising)
Economy is growing above trend and accelerating. This is typically a favorable environment for:
- Cyclical stocks
- Risk assets
- Commodities
Slowdown (LEI > 100, Falling)
Economy still above trend but momentum is fading. Consider:
- Reducing cyclical exposure
- Increasing quality tilt
- Extending duration in bonds
Contraction (LEI < 100, Falling)
Economy below trend and still deteriorating. Defensive positioning recommended:
- Defensive sectors (utilities, staples)
- High-quality bonds
- Cash / low volatility strategies
Early Expansion (LEI < 100, Rising)
Economy still weak but improving. Early cycle opportunities:
- Small caps historically outperform
- Credit spreads typically tighten
- Early cyclicals (financials, industrials)
Data Sources
Primary Source
OECD Statistics
Composite Leading Indicators (CLI) - Amplitude Adjusted
The OECD publishes CLI data for all member countries and major emerging economies. Data is typically released monthly with a 1-2 month lag.
Alternative Sources
FRED (Federal Reserve Economic Data)
US Conference Board LEI components
For the United States, we also track the Conference Board's Leading Economic Index, which uses slightly different components optimized for the US economy.
Countries Available
USA, Canada, United Kingdom, Germany, France, Italy, Japan
Australia, Switzerland, South Korea
China, India, Brazil, Mexico
Data Sources
Leading Indicators: OECD CLI | US LEI: Conference Board | Treasury Yields: FRED