Jan. OECD Leading Index: Highest Level Since 2007
OECD (March 14) -- "Composite leading indicators (CLIs) for January 2011, designed to anticipate turning points in economic activity relative to trend, continue pointing to expansion in most OECD countries. The CLIs for Germany, Japan, and the United States continue pointing to robust expansion relative to trend. Signs of regained growth momentum characterise the CLIs for France and Canada. The CLI for the United Kingdom points to a slow but stable pace of expansion. The CLI for Italy continues pointing to a moderate downturn.
MP: The January CLI reached 103.1, the highest level since May 2007 before the global economic slowdown. Except for three monthly declines in May-July 2010, the CLI has been on a positive upward trend for almost two years now, since March 2009. Compared to the cyclical low of 90.7 in February 2009, the CLI has increased by more than 12 points to 103.1 in January.
4 Comments:
Does that signal another slowdown like the one we had after 2007?
Hi Mark, I've just started following your blog.
One question: do you think this index actually PREDICTS economic events, rather than just recording them after they happen? I notice that the index was high until 2007, it didn't seem to predict the crisis.
Shane: By definition, an Index of Leading Economic Indicators is constructed as a composite index of individual variables, that as a group, will predict (or lead) the future direction of the economy. In this case, the OECD Leading Index started turning down in June 2007, six months before the recession started in the U.S. However, keep in mind that this is the leading index for all of the 30 OECD countries, not just the U.S.
For just the U.S., the Conference Board's Index of Leading Economic Indicators started turning down in August 2007, four months ahead of the official starting date of the U.S. recession in Dec. 2007
Cool, I see.
There has been some debate here in Ireland over the credit rating agencies (mainly because they have been slashing Ireland's rating). The criticism is that they did not predict the crisis, but instead their retrospective downgrading of countries like Ireland and Greece served only to make their credit problems worse.
Hence the scepticism over economic predictions! Anyway hopefully OECD are right and things are looking up.
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