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Economy in Brief

OECD Leaders Rose
by Tom Moeller January 15, 2007

The Leading Index of the major 7 OECD economies rose 0.2% after a like gain during October but earlier month's increases were revised lower. The index's six month growth rate dropped to 1.1% from 1.6% as a result of the revisions.

During the last ten years there has been a 64% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven OECD countries.

The U.S. leading indicators increased 0.2% for the second month but September's gain was revised down sharply to a slight decline. The index's six month growth rate as a result was halved to 1.0%, down from growth rates above 4% at the beginning of 2006. The correlation between the leaders' growth rate and U.S. real GDP growth has been a high 73% during the last ten years.

The leading index for the European Union (15 countries) rose 0.1% for the third month in the last four. The modest gains dropped the index's six month growth rate to 2.0%, half the growth of earlier in the year. During the last ten years there has been a 59% correlation between the change in the leading index and the quarterly change in the European Union GDP volume index.

The German leading index rose a firm 0.5% increase in November but the 0.5% increase first reported for October was revised to 0.2%. That pulled the leaders' growth to 3.5%, less than half its earlier growth. During the last ten years there has been a 32% correlation between the change in the German leading index and the quarterly change in GDP volume.

The Italian leading index fell for the fourth month in the last five and lowered the series' six month growth rate to -2.1%.

A French leaders also dipped 0.1% but six month growth in leaders held steady at a moderate 2.3%. During the last ten years there has been a 54% correlation between the leaders' growth rate and growth in France's real GDP.

The leading index in Japan rose 0.1% for the third consecutive month. Nevertheless the index's six month growth rate remained negative at -0.9%. The leaders' correlation with Japan's real economic growth has been a meaningful 41% during the last ten years.

The Canadian leaders surged 1.5% after October's 0.9% jump. The leaders' six month growth rate consequently surged to 6.9%, its best since 2002, due to higher share prices in Toronto. The correlation of the leaders' growth with Canadian real GDP has been 49% during the last ten years.

The UK leaders rose a modest 0.2% for the second month and the six month growth rate increased to a low 1.4%. During the last ten years there has been a 36% correlation between the leaders' growth rate and U.K. real GDP growth.

The latest OECD Leading Indicator report can be found here.

OECD Warns Climate Change Is Threatening Europe's Skiing Trade is available here.

OECD November October Y/Y 2005 2004 2003
Composite Leading Index  105.45 105.23 1.5% 102.79 102.30 97.80
 6 Month Growth Rate 1.1% 1.0% -- 0.7% 3.5% 2.6%
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