REYKJAVIK, Iceland, Aug. 18, 2017 (GLOBE NEWSWIRE) -- The Analytica Composite Leading Indicator (CLI) for Iceland dropped in July by 0.2 per cent. However, values for January through July were revised upwards. The CLI indicates growth may be normalizing. Gross Domestic Product (GDP) may contract in Q2 on the previous quarter. Nevertheless, growth on the year may still stay above its long-term trend.
Three of the six components contract on the previous month. After adjusting for seasonality and long-term trend there is a contraction on the month for both the number of tourist arrivals and consumer confidence. These constitute the largest factors contributing to the CLI drop. However, the long-term trend of some important CLI components remains strong. The main risk factors continue to include 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 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 July, three of the six underlying components contract year on year. Furthermore, three of the six components contract on the previous month.
Table 1 shows the development of the CLI during the past twelve months. The value for July drops to 99.5 or by 0.2 per cent. This value serves as an indicator to economic activity six months into the future, i.e. January 2018. A value of 100 indicates GDP in line with its long-term trend.
| Table 1. Analytica's CLI 2016-2017 | |||||||||
| Change in % | Indication | ||||||||
| Index | on month | YOY | for month | ||||||
| 2016 | |||||||||
| July | 101.0 | 0.0 | % | 0.7 | % | Jan. 2017 | |||
| August | 101.0 | 0.0 | % | 0.4 | % | Feb. | |||
| September | 101.0 | 0.0 | % | 0.3 | % | March | |||
| October | 100.8 | -0.2 | % | 0.0 | % | April | |||
| November | 100.5 | -0.3 | % | -0.4 | % | May | |||
| December | 100.2 | -0.3 | % | -0.9 | % | June | |||
| 2017 | |||||||||
| January | 100.1 | -0.2 | % | -1.2 | % | July | |||
| February | 100.2 | 0.1 | % | -1.1 | % | August | |||
| March | 100.3 | 0.2 | % | -0.9 | % | Sept. | |||
| April | 100.3 | -0.1 | % | -0.9 | % | Oct. | |||
| May | 100.0 | -0.3 | % | -1.1 | % | Nov. | |||
| June | 99.7 | -0.3 | % | -1.4 | % | Dec. | |||
| July | 99.5 | -0.2 | % | -1.5 | % | Jan. 2018 | |||
The August Composite Leading Indicator is scheduled for release on September 19, 2017.