The CEIC Leading Indicator is a proprietary dataset designed by CEIC Insights to precede the development of major macroeconomic indicators and predict the turning points of the economic cycle for key markets. It is a composite leading indicator that is calculated by aggregating and weighting selected leading indicators covering various important sectors of the economy, such as financial markets, the monetary sector, labour market, trade and industry. It is developed through a proprietary CEIC methodology and employs data from the CEIC database. The CEIC Leading Indicator currently covers eight regions – Brazil, China, India, Indonesia, Russia, the Euro Area, Japan and the United States.

The economic activity in Brazil may accelerate in the fourth quarter of 2021, as the country’s CEIC Leading Indicator – which anticipates turning points of the business cycle – exceeded the threshold of 100, standing at 101 in May. It means that the country’s economy may grow slightly above the long-term trend from October 2021, as the bulk of the population is expected to be vaccinated until then, which would bring back the demand for many face-to-face activities, particularly in the services sector.

Some key variables supported the performance of the CEIC Leading Indicator in May. The manufacturing confidence indicator rose to 4.2% in the month, after falling for four months in a row, reflecting the improved prospect for economic recovery on a global scale, which may have a positive impact on Brazilian exports. The demand for construction remains high in the country, as the expectation to purchase inputs index increased to 54.9 in May from 51.7 in April 2021. The consumer inflation expectation indicator reached 5.9 in May, the highest figure in forty-two months, as the prices of fuels and energy in the country have been growing. Notably, international crude oil prices rose to a monthly average of USD 66.9 per barrel in May from USD 63.2 in April. In the stock markets, the equity market index rose to 126,216 in the end of May from 118,893 in the end of April, supported by a growing number of vaccinated people.

However, Brazil’s economic growth may remain sluggish in the long run, as the smoothed CEIC Leading Indicator fell by 1.3 points m/m to 100.85 in May. The country is in the middle of an energy crisis, due to drought in the reservoir regions of hydroelectric plants, which may increase substantially the prices of electricity from June onwards. This may aggravate the growing inflation in the country and lead the central bank to increase further the Selic benchmark interest rate.

Keep informed each month on the predicted turning points of the economic cycle for key markets with our free, proprietary CEIC Leading Indicator. Learn more and register here