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Economy in Brief

OECD LEIs Advance but Slow
by Robert Brusca  February 14, 2011

The US economy and the OECD remain on roughly the same path. The trend restored leading indicators from the OECD show that from 2008 onward, there has been a severe down-phase, and a strong up-phase that has since played out and now a small upturn that hints at continued expansion. The OECD leading indicators for all of the OECD area, for the main seven OECD nations, for Japan and for the US all are positive in their December month-to-month signals. Japan’s positive result is heartening in the wake of its reported Q4 GDP decline.

Still the deceleration in the various OECD metrics are clear cut. Yet, that is not surprising after such a boom to encounter a pronounced period of deceleration but it then must segue way into a period of expansion again. This one at least hints at doing that.

Beyond the LEI metrics the ordinary economic data suggest that the transition to sustained growth appears to be in train. While the events in Egypt and the Middle East, and the debt issues that still are unresolved in Europe, the slowdown in China and spike in commodity prices all hover and pose certain challenges to continued expansion, in the main, data continue to press ahead and point to growth.

The six-month trend adjusted LEIs represent the way that the OECD likes to look at its indicators. On this basis the OECD area is coming off a boom (the 6-mo indicators of 12-mos ago) then they slowed sharply (the 6-Mo gain from 6-months ago) and have since slowed to crawl (the most recent six month gain). Japan’s indicators have leveled out at about 2% growth on those horizons while the US economy has continued to step down its readings.

But in the current month we see the various OED measures coming back to life and posting accelerations over their November values. On balance, the OECD data are consistent with the expansion enduring but they are not strong indicators in any particular direction at the moment.

OECD Trend-restored leading Indicators
  Growth:M/M Growth Progression-SAAR
  Dec-10 Nov-10 3Mo 6Mo 12Mo Yr-Ago
OECD 0.1% 0.1% 1.2% 0.1% 0.9% 8.1%
OECD7 0.2% 0.1% 1.3% -0.2% 0.6% 7.7%
OECD.Japan 0.4% 0.3% 3.9% 1.9% 2.0% 3.3%
OECD US 0.3% 0.2% 2.7% 0.9% 1.9% 7.8%
  Six Months Six Month Readings at 6Mo Intervals:
  Change in 6M Avg Recent six 6Mo Ago 12Mo Ago 18Mo Ago
OECD -0.2% -0.1% 0.1% 1.7% 12.2% 4.2%
OECD7 -0.5% -0.4% -0.2% 1.4% 12.8% 2.9%
OECD.Japan 0.2% 0.2% 1.9% 2.1% 11.6% -4.4%
OECD US 0.0% 0.2% 0.9% 3.0% 14.0% 2.1%
Slowdowns indicated by BOLD RED
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