Leading Indicator Increases in May

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Leading Indicator Increases in May

The Leading Economic Index® for Brazil (LEI), published by FGV IBRE in partnership with The Conference Board (TCB), rose 1.0 percent in May to 94.7, after declining almost 17 percent in the previous month. The cumulative change for the last six months remained negative, at 20.2 percent. Of the eight component series, the Expectations Indices for Services, Consumers, and Manufacturing were contributed most positively to the result.

The Coincident Economic Index for Brazil (CEI) (FGV IBRE / TCB), which measures current economic conditions, declined 9.4 percent to a reading of 90.0, in the same period.

“The CEI experienced the largest decline in the history of the series consistent with a sharply contracting economic cycle”, according to Paulo Picchetti of FGV IBRE. “The LEI picked up slightly reflecting expectations in relation to the gradual reopening of activities, but should be considered in light of the basis for comparison being extremely low. Taken together, the indices still suggest a high degree of uncertainty regarding the prospect of economic recovery in the coming months”, says Picchetti.

The Leading Economic Index aggregates eight components that measure economic activity in Brazil. Each has proved individually efficient in anticipating economic trends. Aggregating individual indicators into a composite index filters out so-called "noise”, smoothing out the volatility of individual components, and revealing the underlying economic trend.