EMU-periphery lead indicators still weakening
Simon Ward
Post a Comment
The OECD's leading indicator indices for November signal a short-term upswing in global industrial momentum, validating a forecast made last July on the basis of monetary developments. The improvement, however, does not extend to the beleaguered EMU-periphery.
The chart shows six-month changes in combined industrial output and a leading index for the group (i.e. Italy, Spain, Portugal, Greece and Ireland) together with a "leading indicator of the leading index", which heralds turning points. The six-month decline in the index accelerated further in November and the double-lead indicator has yet to signal a bottom.
This weakness is consistent with an ongoing contraction of real narrow money discussed in a previous post.
These developments suggest that the recent fall in EMU-periphery industrial output will gather pace in early 2011. Economic weakness is likely to undermine fiscal consolidation plans, in turn ensuring that the sovereign debt crisis rumbles on.
View Printer Friendly Version
Email Article to Friend
Reader Comments