REYKJAVIK, Iceland, May 19, 2015 (GLOBE NEWSWIRE) -- The Iceland Composite Leading Indicator (CLI) dropped by 0.1 percent in April. This is the first contraction for eight months.
The drop in the indicator can mostly be explained by fewer tourist arrivals for April and by a drop in consumer confidence relative to the long term trend. However, it is too early to draw conclusions from a single months drop in tourist arrivals. There continue to be firm indications of increased growth of domestic demand. Merchandise imports are growing at a brisk pace and debit card turnover is on the rise. Domestic labor action may be among those factors explaining the fall in tourist arrivals and decreased confidence levels. The main risk factors to the still positive outlook include the possibility of continued labor action and some external factors mainly in relation to the geopolitical situation.
Turning points of the CLI tend to precede turning points in economic activity relative to trend by approximately six months. Economic activity is measured by Gross Domestic Product (GDP) published by the Statistical Bureau of Iceland. The calculation of Analytica’s CLI is based on methodology adopted by the OECD.
There are six components of Analytica’s CLI. These are: Fish catches, inflation adjusted debit card turnover, number of tourists visiting Iceland, the MSCI World equities index, inflation adjusted imports and the Gallup Index of Consumer Confidence. For April all of the six underlying components are strengthening year on year. However, three of the six components rise on the previous month.
Table 1 shows the development of the CLI during the past twelve months. The value for April drops by 0.1 percent on the month to 101.7. This value serves as an indicator to economic activity six months into the future, i.e. October 2015. A value of 100 indicates GDP in line with its long term trend.
| Table 1. Analytica's CLI 2014-2015 | |||||||||
| Change in % | Indication | ||||||||
| Index | on month | YOY | for month | ||||||
| 2014 | |||||||||
| April | 101.0 | 0.0 | % | 0.0 | % | Oct. | |||
| May | 100.9 | -0.1 | % | -0.2 | % | Nov. | |||
| June | 100.7 | -0.2 | % | -0.4 | % | Dec. | |||
| July | 100.4 | -0.3 | % | -0.8 | % | Jan. 2015 | |||
| August | 100.3 | -0.1 | % | -1.0 | % | Feb. | |||
| September | 100.4 | 0.1 | % | -1.1 | % | March | |||
| October | 100.6 | 0.2 | % | -1.0 | % | April | |||
| November | 100.9 | 0.3 | % | -0.6 | % | May | |||
| December | 101.2 | 0.3 | % | -0.1 | % | June | |||
| 2015 | |||||||||
| January | 101.4 | 0.3 | % | 0.3 | % | July | |||
| February | 101.7 | 0.2 | % | 0.6 | % | August | |||
| March | 101.8 | 0.1 | % | 0.7 | % | Sept. | |||
| April | 101.7 | -0.1 | % | 0.7 | % | Oct. | |||
The May Composite Leading Indicator is scheduled for release on June 18, 2015.