NSCB - Press Release - Rise of Leading Economic Indicator (LEI) slows down in the third quarter

Rise of Leading Economic Indicator (LEI) slows down in the third quarter
(PR-20100902-ES4-01, Posted 02 September 2010)

The composite leading economic indicator (LEI) continued to rise in the third quarter of 2010 but at a pace not as remarkable as in the first two quarters of the year. The Q3 2010 LEI improved to negative 0.037 from a revised negative 0.090 in the second quarter of 2010 (Figure 1).

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 1986 to Q3 2010

leitechnotesfig1

The number of positive contributors as concurrently estimated totaled to nine, compared to Q2 2010 where all eleven indicators contributed positively, and ten in Q1 2010. The combined share of positive contributors for this quarter consequently dropped to only 68.3 percent from the 100.0 percent and 97.4 percent in the second and first quarters, respectively.

The positive contributors, starting with the largest positive contributor, were: consumer price index, money supply, total merchandise imports, terms of trade index, hotel occupancy rate, stock price index, tourist arrivals, foreign exchange rate, and electric energy consumption. The two negative contributors, beginning with the largest negative contributor, were: number of new businesses, and wholesale price index. The negative contributors accounted for 31.7 percent of total contribution.

The contribution of each of the eleven (11) indicators is measured through the combined effects of 1) the direction (the slope or change) of the cycle component of each indicator; and 2) the correlation of their cycle components with that of the reference series.

Table 1 highlights the composite LEI estimates and the corresponding slopes for first quarter 2001 to third quarter 2010.

Table 1: Composite Leading Economic Indicator (LEI)
First Quarter 2001 to Third Quarter 2010

Period	Composite LEI	Slope
2001 Q1	(0.113)	(0.041)
Q2	(0.110)	0.003
Q3	(0.142)	(0.032)
Q4	(0.289)	(0.147)
2002 Q1	(0.419)	(0.130)
Q2	(0.358)	0.061
Q3	(0.150)	0.208
Q4	(0.032)	0.118
2003 Q1	(0.076)	(0.045)
Q2	(0.189)	(0.112)
Q3	(0.259)	(0.070)
Q4	(0.171)	0.088
2004 Q1	(0.001)	0.170
Q2	0.074	0.075
Q3	0.035	(0.038)
Q4	(0.019)	(0.055)
2005 Q1	(0.069)	(0.050)
Q2	(0.076)	(0.007)
Q3	(0.027)	0.049
Q4	(0.013)	0.014
2006 Q1	(0.024)	(0.011)
Q2	(0.033)	(0.009)
Q3	(0.041)	(0.008)
Q4	(0.028)	0.013
2007 Q1	0.046	0.074
Q2	0.171	0.125
Q3	0.288	0.118
Q4	0.452	0.163
2008 Q1	0.607	0.155
Q2	0.681	0.074
Q3	0.655	(0.026)
Q4	0.442	(0.213)
2009 Q1	0.002	(0.440)
Q2	(0.422)	(0.424)
Q3	(0.624)	(0.202)
Q4	(0.565)	0.059
2010 Q1	(0.306)	0.259
Q2	(0.090)	0.216
Q3	(0.037)	0.052

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:

Regina S. Reyes / Florande S. Polistico
Tel. No.: (+6 32) 895-5002; (+6 32) 896-7981
E-mail: rs.reyes@nscb.gov.ph; fs.polistico@nscb.gov.ph

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