By : Mohamed Elttar

The OECD Composite leading indicators (CLIs) continue to point to growth losing momentum in Europe and to stable growth in the OECD area as a whole.

In Europe, shaped by surging inflation and declining expectations in manufacturing, the CLIs continue to indicate growth losing momentum in the euro area as a whole, including in France, Germany and Italy, as well as in the United Kingdom.

Outside Europe, the CLIs continue to point to stable growth in Canada, Japan and the United States. Stable growth also continues to be anticipated in most major emerging-market economies, in particular China (industrial sector) and India. In Brazil, however, the CLI continues to signal slowing growth.

The CLIs aim to anticipate cyclical fluctuations in economic activity over the next six to nine months based on a range of forward-looking indicators such as order books, confidence indicators, building permits, long-term interest rates, new car registrations, and many more. Most indicators are available up to April 2022. It is worth noting that ongoing uncertainties related to the war in Ukraine, and COVID-19 are resulting in higher than usual fluctuations in the CLI components. As a result, the CLIs should continue to be interpreted with care and their magnitude should be regarded as an indication of the strength of the signal rather than as a measure of growth in economic activity.

The above graphs show country specific composite leading indicators. Turning points of CLIs (marked by shaded triangles) tend to precede turning points in economic activity relative to trend by six to nine months. The horizontal line at 100 represents the trend of economic activity.

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