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Economy in Brief

OECD Leaders Positive
by Tom Moeller September 12, 2005

The July Leading Index of the Major 7 OECD economies rose 0.4%. Coming on the heels of a 0.5% June increase, the rise lifted the six month growth rate in the index to 0.5%, the first positive reading in six months.

During the last ten years there has been a 68% 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.

A third consecutive monthly increase in the U.S. leaders raised six month growth to 1.6%, its best since last August. The Canadian leaders also managed a third increase in as many months but the six month growth rate remained negative at -1.0%.

Leaders in the European Union (15 countries) squeaked out a 0.2% increase, the second after several months of decline, and the six month growth rate turned positive (0.2%) for the first time since March.

German leaders jumped 0.7%, the most for any month in nearly two years. The gain raised six month growth to 1.2%, the first positive reading this year, and owed much to an improvement in orders inflow and a better business climate. The French leaders also rose a strong 0.6%, enough to turn the six month growth positive for the first time since March. Moving the other way, the Italian leading index fell for the ninth consecutive month due to sharp declines in consumer confidence, the future tendency of order books and production. Six month growth in the leaders dropped to -4.4%, its worst 2000.

The UK leaders rose a modest 0.2%, helped by improvement in the Financial Times Share Index, but six month growth remained negative at -0.7%. Japan leaders rose 0.6% on top of an upwardly revised like gain in June, turning six month growth positive (0.3%) for the first time since January.

The latest OECD Leading Indicator report is available here.

OECD July June Y/Y 2004 2003 2002
Composite Leading Index  102.28 101.91 0.1% 102.05 97.67 96.37
 6 Month Growth Rate 0.5% -0.1%   3.5% 2.6% 2.2%
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