Economic indicator points down

OECD Observer

The Composite Leading Indicator (CLI) for OECD countries published in April showed a drop of half a percentage point in February 2003, to 120.4 from 120.9 in January, a six-month rate of change that continued the downward trend first started in May 2002. Still, the CLI varied from country to country, though nearly all OECD countries, except for Italy and Japan, experienced declines.

The OECD CLI is designed to provide early signals of turning points (peaks and troughs) between expansions and slowdowns of economic activity, covering a wide range of key short-term economic indicators like housing permits granted, financial data, and information on stocks and orders, etc. A fall in the indicator suggests the possibility of a weak economic trend ahead.

In the US, the CLI fell by 1.5 points in February, with its six-month rate of change down for the second month in a row after two months of increase. Similarly, the UK’s CLI fell 1 point in February, whereas its six-month rate of change has fallen steadily since June 2002. In Canada, the drop in the CLI was by 0.5 point in February. Its six-month rate of change has been on the decline since May 2002.

France saw a sharp decrease in its CLI in February, as well as in its six-month rate of change. The CLI for Germany also fell after five months of increases, though its six-month rate of change has been in a slump for nine months. In Japan, February’s CLI remained unchanged, in keeping with its stable six-month rate. Italy bucked the trend; its CLI rose in February, as did its six-month rate of change.

©OECD Observer No 237, May 2003




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