Leading Indicator Increases in June

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Leading Indicator Increases in June

The Leading Economic Index® for Brazil (LEI), published by FGV IBRE in partnership with The Conference Board (TCB), rose 7.0 percent in June to 107.2. Of the eight components that comprise the index, seven contributed positively, with the largest positive contribution coming from the Manufacturing Survey´s Expectations Index.

The Coincident Economic Index for Brazil (CEI) (FGV IBRE / TCB), which measures current economic conditions, dropped 4.7 percent to 92.8 in the same period.

“The CEI continues to reflect the sharp downturn that began in the first quarter of the year, especially in the job market”, according to Paulo Picchetti of FGV IBRE. “In contrast, the gain in the LEI in June could signal the expected recovery resulting from the relaxation of social distancing measures, despite the continuing high level of uncertainty about the economic outlook due to the dynamics of the pandemic”, 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.

About the Leading Economic Index (LEI)

FGV IBRE and The Conference Board launched the Leading Economic Index (LEI) for Brazil in July 2013. With a series dating back to 1996, the LEI would have reliably anticipated all four recessions identified by the Brazilian Dating Committee of Economic Cycles (CODACE) during this period. This indicator allows Brazil to directly compare its business cycles with 11 other countries and regions already covered by The Conference Board: China, the United States, the Eurozone, Australia, France, Germany, Japan, Mexico, Korea, Spain and the UK.

The eight components of the Brazilian LEI are:

Pre-fixed DI swap reference rate – 1 year (Source: Brazilian Central Bank)

Ibovespa Stock Market Index (Source: BOVESPA - São Paulo Stock Exchange)

Expectations index for Industry (Source: FGV IBRE)

Expectations index for Services (Source: FGV IBRE)

Expectations index for Consumers (Source: FGV IBRE)

Durable consumer goods - physical production index (Source: IBGE – Brazilian Institute of Geography and Statistics)

Terms of trade index (Source: FUNCEX – Center for Foreign Trade Studies Foundation)

Exports Quantum Index (Source: FUNCEX - Center for Foreign Trade Studies Foundation)

ABOUT THE CONFERENCE BOARD

The Conference Board is the member-driven think tank that delivers trusted insights into what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org

ABOUT FGV IBRE

Created in 1944, FGV is a Brazilian private higher education institution, think tank, and producer of statistics, with a mission "to foster Brazil’s socioeconomic development”. The Brazilian Institute of Economics (IBRE) is FGV´s arm with the mission to produce and disseminate high-quality economic statistics and studies that are relevant to improving policies and private action in Brazil. www.fgv.br/ibre