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Economy in Brief

OECD Leaders Declined For Third Month
by Tom Moeller December 15, 2004

In October, the Index of Leading Indicators for the Major Seven OECD Countries fell slightly for the third straight month. The declines pulled the six-month growth rate down to 0.4%, its lowest since May 2003.

During the last ten years there has been a 77% correlation between the leaders' growth rate and the two quarter change in the GDP Volume Index for the Big 7 countries in the OECD.

The leading index in Japan turned negative for the third straight month, with six-month growth falling to -1.5% There has been a 45% correlation during the last ten years between the leaders and real GDP growth in Japan. Net foreign trade has contributed significantly to the leaders' deterioration.

The leaders for the United States fell for the third straight month and six month growth fell to just 0.2% with a tighter yield curve, lower consumer sentiment & a lower business climate indicator offsetting other component gains.

The leading index growth rate for the European Union has held up well relative to other countries, with gains logged during the last four months, though six-month growth fell to 2.5% from a peak of 6.2% late last year. Growth in the German leaders fell to 2.0% in October versus 8.3% in January as a result of a tighter yield curve and a slower orders inflow. Leaders in Italy improved some with the six-month growth rate slightly positive after several months negative; the decline in consumer confidence stabilized. In France, the leading index growth rate decelerated to 3.7% versus 8.2% at the start of the year and growth in the UK leaders improved to 1.1% after two months negative during the summer.

In Canada the leaders went further negative with a tighter yield curve.

Visit the OECD at this website.

OECD Main Economic Indicators Oct Sept 6-Mth Chg 2003 2002 2001
OECD Major Seven - Leading Index (Trend Restored) 102.0 102.1 0.4% 2.6% 2.3% -3.2%
  European Union 106.1 105.8 2.5% 2.3% 3.5% -2.5%
  Japan 97.4 97.7 -1.5% 1.9% 0.5% -4.4%
  United States 102.4 102.5 0.2% 3.7% 2.0% -3.3%
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