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Economy in Brief

OECD Leading Indicators Showing Declining Momentum
by Robert Brusca January 11, 2008

The OECD trend restores leading indicators show a slowing is in progress across the OECD area. The OECD prefers to look at 6-month changes in its indicators; these are presented for four separate non-overlapping periods at the bottom of the table. All regions/countries shown have declines over the recent past six months - that indicates a loss of momentum. Over the previous 6-months only OECD Europe was declining, although Japan barely avoided decline with a 0.1% rise. Then over the previous two six month periods all regions saw their trend restored leading indicators declining. What we have is a slowdown that is broad-based.
It is very severe in some places. Japan’s six month drop of 7.5% is sharp. The US drop of 3.8% is also considerable. The OECD Europe drop of 2.4% is substantial.

In the chart above we plot the various indices against the recession bars for the US. The current US decline is not as severe as it was the last time that the US went into recession. Japan’s decline is on the same order of magnitude as it was the last time the US was in recession, however. Europe’s decline is more like the sort of slowing it had in 1996 than when the US was in recession in 2001. However, for all these comparisons the situation is still in flux and in most places flux means that conditions are still deteriorating.

OECD Trend-restored leading Indicators
Growth progression-SAAR 3-Mos 6-Mos 12-mos Yr-Ago
OECD -3.1% -3.1% -0.3% 2.2%
OECD 7 -4.5% -4.2% -1.0% 1.4%
OECD Europe -1.8% -2.4% -0.7% 2.4%
OECD Japan -1.2% -7.5% -3.8% 1.4%
OECD US -6.6% -3.8% -0.1% 1.5%
Six month readings at 6-Mo Intervals:
  Recent six 6-Mo Ago 12-Mo Ago 18-Mo Ago
OECD -3.1% 2.6% 0.9% 3.6%
OECD 7 -4.2% 2.2% 0.1% 2.6%
OECD Europe -2.4% 0.9% 1.1% 3.6%
OECD Japan -7.5% 0.1% -0.5% 3.3%
OECD US -3.8% 3.6% 0.5% 2.4%
Slowdowns indicated by BOLD RED
large image