The Leading Indicator consists of ten series selected among over a hundred, applying different criteria which include conformity, temporal consistency, economic rationality, representation, availability and opportunity. The ILCIF construcion is based on the aggregation of ten variables, weighted by the inverse of their volatility.
The Diffusion Index reflects the proportion of series that increased in a certain month, and indicates how spread the increase or decrease is among the different sectors and economic aggregates.
In order to build this indicator, we add the number of series (seasonally adjusted) weighted according to its percentage variation from the previous month. The ones which have increased by more than 0.05% add 1, the ones which did not change (between 0 and 0.05%) add 0.5, and the ones which decreased do not add. The result is divided is divided by the total number of series of the ILCIF.