A new monthly euro Area-wide Leading Indicator (ALI) has been developed to predict recessions and recoveries in the euro area business cycle. By using a deviation cycle methodology and selecting nine leading series, the ALI reliably leads the business cycle indicator (BCI) by 6 months. The longer leading components of the ALI can predict the BCI up to almost a year ahead and are satisfactory predictors up to 2 years ahead. During the 2008/2009 recession and following recovery, the ALI accurately predicted the euro business cycle.