An OECD Composite Leading
Indicator, as the name suggests, is constructed from a small number of economic
time series that have similar cyclical fluctuations to those of the business
cycle, and moreover have a tendency to turn earlier than the business cycle. The
business cycle is typically represented by movements in GDP around its long term
trend. The OECD CLIs are composite indicators with components that:
- measure early stages
- respond rapidly to
changes in economic activity;
- are sensitive to
expectations of future activity or
- are control variables
that measure policy stance.
A large set of component
series, selected from a wide range of economic indicators, are used in
constructing CLIs (around 200 series are used in total, about 5-10 for each
country). CLIs are calculated for 33 OECD countries, 6 non-member economies and
8 zones. They are calculated in three forms: amplitude adjusted, trend-restored,
and year-on year growth rate. These are comparable, respectively, with the
de-trended reference series, the original reference series and the year-on-year
growth rate of the reference series. The press release focuses on the amplitude
adjusted form of the CLI, and includes the major countries and zones.
The OECD (Organisation for Economic
Co-operation & Development) -Total covers the following 33
countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel,
Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway,
Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey,
United Kingdom, and United States.
area covers Canada, France, Germany, Italy, Japan, United Kingdom and United
area (only Euro area countries
that are members of OECD) covers the following 15 countries: Austria, Belgium,
Estonia, Finland, France, Germany, Greece, Italy, Ireland, Luxembourg, the
Netherlands, Portugal, Slovak Republic, Slovenia and Spain.
Five Asia area covers China, India, Indonesia, Japan and Korea.
 The CLI for Japan may
not fully capture the impact of the hike in its consumption tax rate in
April 2014, the first increase since 1997, which is likely to result in an
uneven growth profile during the first three quarters of 2014.