The World Economy... - 12/7/2010

OECD Composite Leading Indicator Points To A Slowdown In Economic Activities In 2H 2010

OECD composite leading indicator’s 12-month rate of change moderated to 8.3% in May, from +9.5% in April and a high of 10.2% in March. This was the second consecutive month of easing, indicating that the expansion of the OECD countries’ economies will likely slow down in the months ahead, in tandem with a slowdown in global manufacturing and services activities for the second straight month in June. The slowdown was broad-based, from the US to UK, Euroland, Japan and major economies in Asia. As a result, the US and Canada’s sub-indices eased to 10.3% and 7.1% respectively in May, from the corresponding rates of +11.5% and +8.8% in April. Similarly, the sub-indices for the Euroland and UK weakened to 6.7% and 4.8% respectively in May, the third consecutive month of slowing down and from the corresponding rates of +8.2% and +6.3% in April. The slowdown in these countries’ indices was particularly sharp, as they were hit by a deepening sovereign debt problem in recent months. In the same vein, Japan’s index softened to 7.9% in May, after remaining stable at +8.7% in the previous two months, suggesting that the Japanese economy will likely head south as well. The sub-indices for China and India also eased to 18.2% and 11.1% respectively in May, from the corresponding
rates of +19.8% and +12.4% in April, suggesting that economic activities in these countries are likely to expand at a slower pace in the months head. Similarly, the sub-indices for Brazil and South Africa moderated during the month. Mom, the OECD composite leading indicator remained unchanged for the second consecutive month in May, after slowing down to +0.2% in March and from a high of +0.5% in August last year. As a whole, the readings of the OECD composite leading indicator suggest that the global economy will likely expand at a more moderate pace in 2H 2010, in line with our expectation.

The World Economy... - 12/7/2010