Composite Leading Indicators Suggest Stable Growth In The OECD

The OECD Composite Leading Indicators (CLIs) continue to suggest stable growth momentum in the OECD. CLIs are designed to anticipate turning points in economic activity relative to trend.

The US, Canada and the UK CLIs show stable growth momentum and in the UK growth is stabilising at rates above the trend. The CLI for Japan shows an interruption in the growth momentum although it is probably only a temporary effect. The CLIs for the euro area as a whole and for Italy in particular indicate a positive change in momentum. Germany may be losing some of its momentum but it is at a high level.

In the BRICS emerging economies, Brazil's CLI points to below trend growth, China and Russia are growing around the trend and India may be returning to faster growth with a CLI suggesting a positive turning point.

Signs Of Weak Growth Prospects In OECD CLI's

The composite leading indicators of the OECD suggest there may be weak growth prospects in major economies. The CLIs for Japan, Germany, France and the Euro Area pont to weak growth but there are signs of stabilisation in other economies such as Canada, China and the US and possibly Italy as well. Weak growth signs also appear in India and Russia.

OECD Leading Index Down 0.1%

The composite leading indicator index from the OECD shows a decline of 0.1% between July and August 2012 and a comparable fall with December 2011. The group of seven major economies also fell by 0.1% between July and August but the fall between August and December 2011 was 0.2%. The euro area, France, Italy and the US also fell 0.1%. Germany fell 0.2%. The UK index increased by 0.1%.

OECD Leading Indicators Suggest A Potential Turning Point

Composite leading indicators from the OECD, designed to anticipate economic turning points relative to trend, show signs of regained momentum in economic activity in Japan and the United States. The Euro Area also shows signs of a potential turning point. The major European economies have, however, diverging assessments. The emerging BRICS economies show stronger positive signals than the last assessment.

OECD CLI Suggest Slow Down In Recovery

The Composite Leading Indicators (CLIs) published by the OECD for April 2011 suggest a slight loss of momentum in most major economies with the US the exception. Stability in the pace of expansion was suggested in Germany and the UK but France, Italy and Canada show signs of a slowdown. Signs of a slowdown also appear in China, Brazil, India and Russia.

OECD CLIs Show Signs Of Expansion

The composite leading indicators of the OECD countries for February 2011 signify continued expansion in the economies of most member countries. The OECD area annual growth rate was 1.8% compared with the Euro area 1%. The trend of expansion is continuing in Germany and the United States. The rate of expansion seems to be slower but stable in the UK. France and Canada are possibly regaining momentum but Italy may be losing momentum.

Russia seems to be continuing its current economic expansion phase while China shows signs of more moderate economic activity. India is pointing towards a slowdown but Brazil should remain near its long-term potential. The Major 5 Asian economies grew by 0.2% over the last year and the Major 7 by 2.1%.

CLI Shows Signs Of A Peak In US Economy

The OECD composite leading indicators for August suggest that economic expansion is continuing to slow down. The CLI decreased by 0.1 point in August for the fourth month in a row. A downturn is expected in Canada, France, UK, Italy, Brazil, India and China. Expansion is indicated for Germany, Japan and Russia. The US is showing signs of a peak in economic activity.

Moderate Growth Expected In OECD

The latest OECD composite leading indicators statistics signify a moderation in the rate of expansion compared to last month. The index for the OECD was down 0.1 in July 2010.

The downturn predicted for Canada, France, Italy, UK, China and India means that the signs suggest a slower rate of economic growth than was anticipated for last month. The outlook for Brazil, US and Japan is that they will possibly peak and their expansion may lose momentum. The German and Russian economies are expected to expand as are the OECD and the Euro areas. The OECD area last peaked in February 2008 and troughed in May 2009 along with the Euro area which last peaked in March 2008.

Slower Rate Of Expansion May Continue

The OECD Composite Leading Indicators for April suggest that there is a slowing down of expansion in most OECD countries. The OECD area CLI increased by 0.4 to in April 2010, following from the 0.5 in March. The increase has slowed now for the nine consecutive months.

The growth cycle outlook suggests that potential peaks have appeared in Brazil and in China, France and Italy. The Major Five Asian economies (China, India, Indonesia, Japan and Korea) also display signs of a potential peak. The continuity is also there in Japan, US and Germany and is expected to be maintained though at a slower pace. Brazil's recent peaks were in October 2004 and May 2008 the most recent trough was in April 2009. The most recent trough in China was in February 2009 and their most recent peak was in December 2007.

OECD Points To An Expansion Slowdown

The Composite Leading Indicators from the OECD for March 2010 suggest that where the economic expansion has been taking place there may be a slowdown in the pace. Most of the signs of expansion and recovery say the OECD have been tentative but in France and Italy the signs are stronger. There is also a possibility that expansion may also be slowing in Brazil and China.

The CLI indicator for the OECD area as a whole was 0.6 points up in March 2010 with the US increasing by 0.8 and Japan by 0.9 points. The euro area increased by 0.5. Brazil and China both decreased by 0.3 points indicating the possible halt to expansion in China and to recovery in Brazil. India and Russia increased slightly by 0.3 and 0.6 points respectively.

Further Economic Expansion Likely In OECD

The signs from the composite leading indicators of the OECD for February 2010 are still in favour of further economic expansion in the growth cycles of member states. The pace across different countries and regions is however expected to vary. The US and Japan look the most likely to continue to increase their economic activity in coming months with an increase of 0.9 points each. Signs of slower growth were recorded in China 0.0, and France 0.1, and Italy 0.2. The OECD area increased by 0.7 in February 2010. The UK recorded an increase of 0.4 points. The Euro area recorded 0.5 and the G7 0.7 points. India 0.4, Brazil 0.3 and Russia 0.5 recorded fairly moderate increases.

OECD Economies Continue Expanding

The Composite Leading Indicators (CLI) for January released today (5 March 2010) from the OECD seem to show that the economic recovery and expansion that has been taking place in the OECD economies is continuing. The improvement in economic activity in the G7 is only marginally better than that for December.

The index for the OECD area increased by 0.8 points in January 2010, 11.3 points higher than January last year. The increase was evenly distributed between the 'Triads', the US, 11 points, the Euro area up 12.5 points and Japan 10.7 points. The statistics show that all G7 economies are in an expansion phase but Brazil and India and in a recovery phase, even though the 5 major Asian economies combined are expanding.

Stronger Expansion Indicators In OECD Economies

The economic outlook for OECD countries is getting better as the composite leading indicators (CLI) suggest stronger expansion is taking place. The G7 were all close to or above their long term trends. The underlying indicator in all these countries is industrial production and in them it has reached a trough. Expansion in the case of OECD CLIs means that the CLI is above the long term trend of the underlying indicator.

The CLI for the OECD increased by 0.9 in December 2009 and at 103.1 was 10.1 points higher than December 2008. The UK CLI increased by 0.9 from 104.9 to 105.8 and was 11.5 points higher than last year. The US and the Euro area also increased by 0.9 and were 9 and 12.2 points higher than last year respectively.

Inflation indicators from OECD include CPI which increased by 1.9% in year to December 2009. In the G7 it was 1.7%. Consumer prices for food fell by 1% in the year to December and for energy they went up by 8.5%. Consumer prices rose by 0.5% between 2008 and 2009 compared to 3.7% between 2007-8. The annual inflation rate in the UK in December was 2.9%. In the euro area inflation (HICP) was 0.9% in December 2009. US inflation (CPI) rose by 2.7% over the year to December.

Continued Recovery In The OECD

Indicators from the OECD continue to point to recovery in OECD economies. The composite leading indicators (CLI) for Canada, France, Italy, Germany and the UK all suggest more expansion in the business cycle than last month. In these OECD economies the main drivers of expansion are finance and business confidence. Non-member economies are also doing better with all major non-members in the recovery phase of the business cycle.

The CLI for OECD countries increased 1 point in October 2009 which is 5.7 points higher than the same period last year and the outlook is for recovery. The UK CLI increased by 1.3 points in October which was 8.8 points higher than last year and the outlook is expansion. The Euro area increased by 1.3 points, 8.8 points higher than last year. The US CLI increased 1 point, 3.9 points higher than last year. France was 10.2 points up on last year, Germany 9.2 and Italy 12.5 points up on last year.

Among the non-members China's CLI had increased 0.2 points in October and 5.7 points on last year, India 0.2 and 4 respectively, Russia increased 1.6 points in the month but was 1.1 points lower over the year and Brazil had increased by 0.7 points in October and decreased 4.2 points since October 2008.

The outlook for the OECD economies is one of recovery and for the Euro area expansion. The economies of Canada, France, Germany and Italy are also expected to expand and G7 and Asian economies are expected to be in the recovery phase as are the major non-member economies. It should also be noted that any signs of recovery contained in the data are more concerned with recovery happening rather than any suggestion of the strength of the recovery.

Signs Of Economic Recovery Getting Stronger

OECD statistics for July are pointing to a broad economic recovery across all of the G7 countries. France, Italy and the UK are especially encouraging as the signs are that the main indicators in these economies are higher than this time last year. Most other countries indicators are better also showing signs of recovery but still lower than last year and there are signs of a trough appearing in Brazil. There are also signs of recovery in China, India and Russia. The OECD CLI increased 1.5 points in July, 1.9 points lower than July 2008. The euro area CLI increased by 1.9 points, 1.4 points higher than a year ago.