Overview

Rebound in LI shows sign of economy is picking up

The Leading Index (LI) is a combination of the selected economic indicators that provide advance signal in economic direction. The LI rose further to 4.9 per cent month on month in May 2020 from 0.2 per cent in April 2020. Five out of seven LI components contributed to the increase with Number of New Companies Registered (1.8%) as the largest contributor. Year on year, the LI grew 0.6 per cent in the reference month, rebounding from a fall 5.7 per cent in April 2020. The improvement is in line as business activities reopened under the Conditional Movement Control Order (CMCO) starting from 4th May 2020 after economic activities “froze” in the previous month. The implementation of the stimulus packages and the short-term economic recovery plan to cushion the COVID-19 impact are expected to alleviate the economic downturn and economy is gradually picking up in the months ahead.

The Coincident Index (CI) which reflects the overall current economic condition, rebounded to 10.6 per cent month on month as compared to negative 15.6 per cent in April 2020. The growth was driven by the significant increase in Volume Index of Retail Trade (5.1%). On yearly basis, the CI improved to negative 11.1 per cent from negative 19.3 per cent in a month before. In May 2020, majority of businesses were allowed to resume operation subject to strict conditions and new norms.

The Diffusion Index is also used as an additional information in determining the peak and trough in economic cycles. The Diffusion Index for LI indicated an improvement in May 2020 to register 42.9 per cent as against 14.3 per cent in April 2020. Aside from that, the Diffusion Index for CI remained at 0.0 per cent as in the preceding month.

(The complete indicators on Leading, Coincident and Lagging Indexes are shown in the following Table 4   .)

Special Issue on Malaysian Economic Indicators: Leading, Coincident & Lagging Indexes Vol. 1/2020 is also available to facilitate user's understanding.

Released By:

DATO' SRI DR. MOHD UZIR MAHIDIN
CHIEF STATISTICIAN MALAYSIA
DEPARTMENT OF STATISTICS MALAYSIA
 DrUzir_Mahidin        Dr_Uzir

23 July 2020
 

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