KUALA LUMPUR: Malaysia's economy is expected to grow at a slower rate in the next four to six months based on the decline in the monthly leading index (LI) , says the Statistics Department.
It said on Monday the monthly change of LI showed a negative growth of 1.1% to 117.8 points in May 2018 from 119.1 points as recorded in April 2018.
The department said this was mainly due to the 0.5% decrease in the number of new companies registered.
“The annual change of LI also registered a decrease of 0.7% in the same month as against 1.4% in April 2018,” it said.
The LI indicators are designed to observe the economic performance in the short term. The LI indicators are useful as short-term predictors of the economy.
According to Wikipedia, stock market returns are a leading indicator: the stock market usually begins to decline before the economy as a whole declines and usually begins to improve before the general economy begins to recover from a slump.
As for, the Coincident Index (CI) which reflects the current economic activity, the department said the CI improved in May 2018, growing 0.3%.
The volume index of retail trade rose 0.5% and real salaries & wages in the manufacturing sector by 0.2%. These were the components that accounted for the increase.
The annual change of CI rose 2.2% in May 2018.
It pointed out the diffusion index for the CI remained at 66.7% since January 2018. The level of diffusion index for the LI was below 50% (14.3%).