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Press Release
The Leading Economic Indicator (LEI) drops four quarters in a row
(PR-200905-ES4-02 , Posted 28 May 2009)
The composite leading economic indicator (LEI) continued its downward course suggestive of the continuing sluggish economic performance of the country for the period under review. Now on its fourth consecutive quarter of decline, the LEI breached into the negative territory posting negative 0.195 in the second quarter of 2009 from a revised positive 0.045 in the first quarter of 2009. The negative index, although not necessarily an indication of a negative growth for the GDP during the quarter, captures the impact of the global financial crisis that started in 2008 on the Philippine economy.
Figure 1 below shows the direction of the composite LEI vis-à-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: Q3 1985 to Q1 2009
The number of positive contributors as concurrently estimated in this period deteriorated from five in Q2 2008 to four in Q3 2008 to three in both Q4 2008 and Q1 2009 to only two this quarter. Money supply continues to be a positive contributor for 2009, while consumer price index turned around from being a negative contributor to positive contributor for this period. The positive contributors accounted for only 14.2 percent of the total contribution.
The negative contributors - beginning with the largest negative contributor – were, foreign exchange rate, total merchandise imports, wholesale price index, terms of trade index, hotel occupancy rate, tourist arrivals, number of new businesses, stock price index, and electric energy consumption. The negative contributors far outweigh the positive contributors, accounting for 85.8 percent share of total contribution.
Table 1 highlights the composite LEI estimates and the corresponding slopes for the most recent years - first quarter 2001 to second quarter 2009.
Table 1: Composite Leading Economic Indicator (LEI)
First Quarter 2001 to Second Quarter 2009
Period |
Composite LEI |
Slope |
2001 Q1 |
(0.109) |
(0.124) |
Q2 |
(0.135) |
(0.026) |
Q3 |
(0.152) |
(0.017) |
Q4 |
(0.254) |
(0.102) |
2002 Q1 |
(0.330) |
(0.076) |
Q2 |
(0.265) |
0.065 |
Q3 |
(0.104) |
0.162 |
Q4 |
(0.035) |
0.069 |
2003 Q1 |
(0.106) |
(0.072) |
Q2 |
(0.206) |
(0.099) |
Q3 |
(0.201) |
0.004 |
Q4 |
(0.154) |
0.047 |
2004 Q1 |
(0.129) |
0.025 |
Q2 |
(0.155) |
(0.027) |
Q3 |
(0.184) |
(0.029) |
Q4 |
(0.160) |
0.024 |
2005 Q1 |
(0.112) |
0.048 |
Q2 |
(0.101) |
0.011 |
Q3 |
(0.084) |
0.017 |
Q4 |
(0.053) |
0.030 |
2006 Q1 |
(0.065) |
(0.012) |
Q2 |
(0.075) |
(0.009) |
Q3 |
(0.059) |
0.015 |
Q4 |
(0.027) |
0.032 |
2007 Q1 |
0.070 |
0.097 |
Q2 |
0.151 |
0.082 |
Q3 |
0.129 |
(0.023) |
Q4 |
0.195 |
0.066 |
2008 Q1 |
0.359 |
0.164 |
Q2 |
0.434 |
0.074 |
Q3 |
0.396 |
(0.038) |
Q4 |
0.250 |
(0.145) |
2009 Q1 |
0.045 |
(0.205) |
Q2 |
(0.195) |
(0.240) |
The contribution of each of the eleven (11) indicators is measured through the combined effects of the: 1) direction (the slope or change) of the cycle component of each of the indicators; and 2) correlation of their cycle components with that of the GDP for industry and services.
Details of the LEI computation procedure, information about the component leading indicators, and limitations on the methodology and latest data are available at http://www.nscb.gov.ph/lei under the Technical Notes section.
ROMULO A. VIROLA
Secretary General
Contact Persons:
Contact Persons: Josephine P. Ferre and Florande S. Polistico
Tel. No.: (+6 32) 895-5002; (+6 32) 896-7981
E-mail: jr.penaflor@nscb.gov.ph ; fs.polistico@nscb.gov.ph
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