Leading indicators and tendency surveys

Composite Leading Indicators (CLI), OECD, May 2020


Unprecedented collapse in CLIs in most major economies


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12/05/2020 - Composite leading indicators (CLIs) in most major economies collapsed by unprecedented levels in April as containment measures for Covid-19 continued to have a severe impact on production, consumption and confidence.

In China, however, where containment measures have already been eased, the CLI for the industrial sector is tentatively pointing towards a positive change in momentum, with April’s CLI and a large upward revision for March both pushing the CLI upwards. Some care is needed in interpretation, as only partial information is currently available for China in April. 


 ‌Sharp slowdown in the OECD area

Unprecedented collapse in CLIs in most major economies‌ 

Graph shows composite leading indicators for the OECD area (CLIs solid line, left axis and the relative month-on-month growth rate, right axis). Turning points of CLIs 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. Shaded triangles mark confirmed turning-points of the CLI. Blank triangles mark provisional turning-points that may be reversed.



Note: Composite leading indicators (CLIs) are designed to anticipate turning points in economic activity relative to trend six to nine months ahead. However, care needs to be taken in interpreting CLIs in the current crisis as governments attempt to tackle the COVID 19 pandemic. Uncertainty surrounding the duration of lockdown measures has complicated the ability of CLIs to provide those forward looking signals. For those economies still in lockdown and with uncertainty about the timing or nature of easing measures, current estimates of the CLI should be viewed as coincident rather than leading. As always, the magnitude of the CLI decline should not be regarded as a measure of the degree of contraction in economic activity, but rather as an indication of the strength of the signal. 


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