REYKJAVIK, Iceland, Sept. 18, 2015 (GLOBE NEWSWIRE) -- The Analytica Iceland Composite Leading Indicator (CLI) rose by 0.4 percent for the month of August following a rise of a 0.4 percent in July. The value of the indicator in upswing has not been higher since 2006. The CLI still indicates growth above long term trend.
The rise of the August CLI can be attributed to the same factors as a month ago. There continue to be indications of healthy growth in domestic demand and a strong growth in tourist arrivals. The CLI correctly anticipated the sharp growth increase early this year as evidenced by the rapid second quarter growth (5.2 percent). The main risk factors to the still positive outlook include some external factors mainly in relation to the geopolitical situation. However, the impact of the ban imposed by Russia on Icelandic fish imports is still not detectable.
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 August five 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 August rises by 0.4 percent on the month to 102.2. This value serves as an indicator to economic activity six months into the future, i.e. February 2016. 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 | |||||||||
| August | 99.9 | -0.2 | % | -1.2 | % | Feb. 2015 | |||
| September | 100.0 | 0.0 | % | -1.3 | % | March | |||
| October | 100.1 | 0.2 | % | -1.2 | % | April | |||
| November | 100.4 | 0.2 | % | -0.8 | % | May | |||
| December | 100.6 | 0.3 | % | -0.3 | % | June | |||
| 2015 | |||||||||
| January | 100.9 | 0.2 | % | 0.1 | % | July | |||
| February | 101.1 | 0.2 | % | 0.4 | % | August | |||
| March | 101.1 | 0.1 | % | 0.4 | % | Sept. | |||
| April | 101.1 | 0.0 | % | 0.4 | % | Oct. | |||
| May | 101.2 | 0.1 | % | 0.5 | % | Nov. | |||
| June | 101.4 | 0.2 | % | 1.0 | % | Dec. | |||
| July | 101.7 | 0.4 | % | 1.6 | % | Jan. 2016 | |||
| August | 102.2 | 0.4 | % | 2.2 | % | Feb. | |||
The September Composite Leading Indicator is scheduled for release on October 19, 2015.