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Economy in Brief


by Robert Brusca OECD LEIs (Trend restored leading indicators) July 6, 2007

The OECD prefers the six month measures to evaluate the signals from its LEIs. Their six month growth rates are plotted in the chart. After a long period of decline in these indicators’ growth, that peaked in Feb 2006 for the US and May 2006 for the Euro-Zone, the US, OECD and Japan indicators are turning higher. Euro-zone trends are still in a downswing but are flattening out and still growing, albeit slowly. The US is showing a potentially strong upswing in the making, but well below the ’04, ’02 and even ’06 pushes, at least so far.

The table below shows growth readings by area on various progressions. The OECD’s preferred six month horizons are in the bottom of that table and it still shows the European growths rates as descending. All other regions hit their 6-mo growth rate low in the previous six month period and in the recent period ended in May they are in an upswing. Three-month growth rates show that Europe has flattened out as its three month and six month rates are identical at 0.7% Japan which has tuned up in six month terms is still weakening in three months compared to six months. The US is, of course, leading the way higher.

OECD Trend-restored leading Indicators
Growth progression-SAAR 3-Mos 6-Mos 12-Mos Yr-Ago
OECD 4.0% 2.7% 1.8% 3.5%
OECD 7 3.5% 1.9% 1.0% 3.2%
OECD Europe 0.7% 0.7% 0.9% 2.7%
OECD Japan 0.5% 0.6% 0.0% 5.9%
OECD US 5.2% 3.0% 1.8% 3.4%
Six month readings at 6-Mo Intervals:
  Recent six 6-Mos Ago 12-Mos Ago 18-Mos Ago
OECD 2.7% 1.0% 3.5% 3.4%
OECD 7 1.9% 0.1% 2.6% 3.8%
OECD Europe 0.7% 1.2% 3.5% 1.9%
OECD Japan 0.6% -0.6% 2.9% 9.0%
OECD US 3.0% 0.6% 2.5% 4.3%
Slowdowns indicated by BOLD RED
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