Composite leading indicators (CLIs), designed to anticipate turning points in economic activity relative to trend, point to stable growth momentum in the OECD area as a whole.
Stable growth momentum is expected in Germany, Japan and India. The CLI for Russia also points to stable growth momentum albeit below long term trend.
In France and Italy, as well as the Euro Area as a whole, CLIs point to firming growth.
On the other hand, CLIs point to growth easing to around long-term trends in the United States and the United Kingdom with tentative signs of a loss in growth momentum in Canada.
In Brazil and China, CLIs point more strongly than last month to a loss in growth momentum.
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 of production;
- 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 focus is on the amplitude adjusted form of the CLI, and includes the major countries and zones.
The OECD-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.
The G7 area covers Canada, France, Germany, Italy, Japan, United Kingdom and United States.
The Euro 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.
The Major Five Asia area covers China, India, Indonesia, Japan and Korea.