Global| Jun 14 2005OECD Leaders Fell Broadly Again
by:Tom Moeller
|in:Economy in Brief
Summary
The Leading Index of the Major 7 OECD economies fell for the third straight month, off 0.5%, the declines growing larger each month. The drop lowered the six month growth rate in the index to a negative 1.6%, the weakest in two years. [...]
The Leading Index of the Major 7 OECD economies fell for the third straight month, off 0.5%, the declines growing larger each month. The drop lowered the six month growth rate in the index to a negative 1.6%, the weakest in two years.
During the last ten years there has been a 69% 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.
The leaders for the European Union (15 countries) declined for the fourth month in the last five and the six month growth rate went negative for the first time in two years. The German leaders fell hard for the third straight month, by 0.4%, and are down 1.3% from the peak last August due to continued weakness in new orders, a negative yield curve and a worsening business climate. The six month growth rate fell to -2.0%, the worst in three and a half years. The French leaders dropped a large 0.8%, after upward revisions to earlier months, pulling the six month growth further into negative territory as consumer confidence plummeted and new car registrations fell. The Italian leading index fell for the sixth consecutive month and the six month growth rate dropped to -1.6% due to souring consumer confidence and weaker order books.
The UK economic leaders fell a sharp 0.5% and are off 1.9% from the peak in February 2004. Six month growth fell to -1.9% due to a collapse in consumer confidence and higher interest rates.The Canadian leaders also fell with six month growth down to -3.5%, the worst in two years. The yield curve is sharply inverted but housing starts recently bounced upward.
The leading index for the US economy fell for the third straight month and six month growth was sharply negative at -1.7% due to a tighter yield curve and weaker consumer sentiment. The leaders for Japan fell for the fifth straight month and six month growth of negative 1.2% was the worst since early 2002.
The latest OECD Leading Indicator report can be found here.
| OECD | April | March | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Composite Leading Index | 101.17 | 101.67 | -0.8% | 102.05 | 97.55 | 96.34 |
| 6 Month Growth Rate | -1.6% | -0.8% | 3.6% | 2.5% | 2.3% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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