NSCB - Press Release -Leading Economic Indicator (LEI) continues to accelerate in the fourth quarter 2011

Leading Economic Indicator (LEI) expands three quarters
in a row
(PR-20120118-ES4-01, Posted 18 January 2012)

The composite leading economic indicator (LEI) continued its upward course after it weakened in the second quarter of 2011, indicating a positive outlook for the country’s economy. For the first quarter of 2012, the LEI posted 0.238 from a revised 0.158 in the fourth quarter of 2011 (Figure 1 and Table 1). The latest LEI computations show the index in firmer positive territory auguring well for the domestic economy to start off the year of the dragon.

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 1988 to Q1 2012

Of the eleven indicators that make up the composite LEI, eight contributed positively. The positive contributors include, starting with the largest positive contributor: (1) visitor arrivals , (2) stock price index, (3) hotel occupancy rate, (4) wholesale price index, (5) total merchandise imports, (6) electric energy consumption, (7) consumer price index, and (8) number of new businesses. The combined share of positive contributors for this quarter increased to 82.1 percent from 65.5 percent in Q4 2011, bolstering the healthier prospects for the economy.

On the other hand, the negative contributors, beginning with the largest negative contributor, were: (1) terms of trade index, (2) money supply, and (3) foreign exchange rate. The negative contributors accounted for 17.9 percent of total contribution.

From the fourth quarter 2011 to the first quarter 2012 LEI, there were three shifts in the direction of contribution: total merchandise imports and wholesale price index, from negative to positive, and foreign exchange rate, from positive to negative.

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 below shows the composite LEI estimates and the corresponding slopes for the period first quarter 2001 to first quarter 2012.

Table 1: Composite Leading Economic Indicator (LEI)
First Quarter 2001 to First Quarter 2012

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 / Aileen S. Oliveros
Tel. No.: (+6 32) 895-5002; (+6 32) 896-7981
E-mail: rs.reyes@nscb.gov.ph; as.oliveros@nscb.gov.ph

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