Composite Leading Indicator (CLI)
Unit: National currency
Multiplier: Millions
Adjustment: Seasonally adjusted; United States seasonally adjusted annual rate
Note: The base year used to calculate real GDP varies by country.
What is Composite Leading Indicator (CLI)?
The Composite Leading Indicator (CLI) is an essential tool for forecasting economic trends, offering early signals of turning points in business cycles worldwide. It’s a vital resource for traders and analysts seeking insights into future economic activities.
Methodology
The CLI methodology integrates various economic indicators like order books, building permits, and consumer sentiment. These indicators are standardized, creating a composite measure. An important aspect of the CLI is the reference value of 100, which represents the long-term average economic performance. Values above 100 indicate above-trend growth, while values below 100 suggest below-trend growth. This reference point is crucial for comparing current economic performance against historical averages, providing a clear and quantifiable measure of economic momentum.
Global Relevance
As a globally encompassing indicator, the CLI offers comparative insights into economic patterns across different countries. Its universal approach enables users to gauge economic performance on a global scale, facilitating a more diversified approach to economic analysis and trading strategy development.
Interpretation
Interpreting the CLI involves understanding its position relative to the trend. A rising CLI suggests an improving economic outlook, whereas a declining CLI may indicate a potential slowdown. However, it’s crucial for users to consider this data in conjunction with other economic indicators and market factors for a well-rounded analysis.