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Economy in Brief

OECD Leaders Improved
by Tom Moeller August 11, 2005

The Leading Index of the Major 7 OECD economies rose in June by 0.5%, the first m/m increase this year. Six month growth in the index also improved to -0.6% from -1.6% during the prior two months.

During the last ten years there has been a 69% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.

Improvement was led by a 0.9% gain in the US leaders. This second consecutive monthly increase raised six month growth to 1.0%, the first positive reading since February. The Canadian leaders also were firm and rose 0.6%, raising six month growth to -1.7% from a recent low of -3.7%.

Leaders in the European Union (15 countries) managed a 0.1% increase following six consecutive months of decline. Six month growth remained negative at -0.3%.

German leaders rose for the second consecutive month. A 0.5% increase raised six month growth to -0.4%. The French leaders also rose by 0.3% but six month growth remained a negative 1.1%. The Italian leading index continued to decline. The 0.7% drop lowered six month growth to -3.3%, its worst 2001.

The UK leaders rose 0.1% after seven months of decline and six month growth remained negative at -0.9%. Japan leaders ticked up 0.2% This first increase of the year left six growth negative at -2.6%.

The latest OECD Leading Indicator report is available here.

OECD June May Y/Y 2004 2003 2002
Composite Leading Index  101.63 101.14 -0.4% 102.02 97.55 96.34
 6 Month Growth Rate -0.6% -1.6%   3.5% 2.5% 2.3%
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