The London-based Centre for Economic Policy Research (CEPR) compiles EuroCOIN, a monthly composite indicator of economic activity throughout Europe. This data series has recently been added to Haver's Eurostat database, as explained in our latest client newsletter. It is meant to be an early gauge of GDP growth in the region, and as seen in the accompanying chart, it does a fairly good job. Over the span since the inception of official Euro area GDP data in 1991, the EuroCOIN indicator (expressed as a quarterly average) has a 71% correlation with GDP. Its monthly frequency gives a reading on the progress of the current quarter well before any "flash" estimate is available.

EuroCOIN consists of a combination of 11 different kinds of data, including such items as industrial production, monetary aggregates, EC and national surveys of business and consumer activity, interest rates, labor markets, and so on. The data are combined through an econometric process and scaled to approximate quarterly growth in GDP. For instance, an increase in the indicator should parallel a pick-up in growth and a reading below zero signals an outright contraction.

In May, the indicator improved to 0.579 from 0.497 in April. It is 0.159 ahead of the year-ago pace. This suggests that GDP growth in Europe has been firm through the spring months. At the same time, the match between EuroCOIN and GDP is not perfect; the indicator missed the weakness in GDP in the first half of 2003, for instance. So there is no guarantee of parallel results presently either. But available data through May strongly suggest that Europe's economy remains on a path for the above-average growth it achieved in the first quarter of 2004.