The OECD report that all major economies are pointing to recovery with France and Italy even pointing to potential expansion. The signs of potential expansion should be treated with care.
The OECD area leading indicator increased by 1.5% in August 2009 and was 0.6% higher than August 2008. The three main economies, the US, the 'eurozone', and Japan all reported increases in their indicators for August. The US increased by 1.6%, the euro area by 1.7% and Japan by 1.3%. Compared to last year however the US was 1.6% down, Japan was 3.9% down, but the euro area was 4.1% up. The UK increased by 1.6% in August and by 1.7% on last year. France increased by 1.3% in August and 6.6% on last year and Italy by 2% in August and 10.4% higher than last year. Germany increased by 2.4% in August and by 2.1% on last year.
The major emerging economies also increased in August. China increased by 1.5% and India by 0.9%. India was also 0.1% higher than last year whereas China was 0.7% lower. Russia increased by 1.1%, 10.2% down on last year. Brazil increased by 0.4% but was 8.5% lower than last year.
The OECD indicators are constructed from data that have similar fluctuations to the business cycle but precede it. Whereas the business cycle uses GDP data, the OECD use indices of industrial production.
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