OECD LEIs Show Moderate Growth But Not Upbeat

The U.S. is seeing its OECD LEI sink as it has been eroding since June 2014. China has been declining since June 2013. The EMU has been on an upswing and is higher year-over-year. Japan has been stuck with a sub-100 reading for 10 months.

The EMU region is one of the stronger ones among the largest economies and regions of the world. Yet, among its original members, the highest country reading last year is 102.4. And that reading is from Spain, a country having been recovering rapidly from a very depressed base but still having a long way to go. Despite all the angst about Greece and its economic circumstance, it has been on one of the strongest upswings in the EMU according to its OECD LEI performance. Nevertheless, Greece's LEI has begun to curl lower over the last few months. Conditions in Greece will get worse in the wake of its intransigence and the imposition of capital controls and domestic cash rationing. Prior to that, Greece, however, was making progress.

The U.S., the U.K., Japan, and China all have OECD LEI readings below the neutral value of 100. Among the earliest EMU members, only Austria has an LEI value below 100.

The EMU as a whole is on an upswing but a weak upswing. Germany, the strong economy of Europe, has only an OECD LEI reading of 100. While Germany's index is higher over six months, it is lower over 12 months. Of the 11 EMU nations in the table, 10 are net higher over six months, but only four are higher over 12 months.

The OECD likes to use its indicators by looking at their signal over six months. On that basis, the EMU readings are moving up, but they are still net weaker over 12 months. While the indicators for the EMU and beyond are still consistent with the idea of continuing moderate growth, the momentum is not good and its assessment depends on the horizon of study. That is not reassuring.