The global leading indicators followed here were little changed in September and remain consistent with a recovery in industrial output growth.

The indicators are based on the OECD’s country leading indicators but are designed to provide earlier warning of growth turning points. The short leading indicator typically leads turning points in six-month global industrial output growth by 2-3 months and the longer leading indicator by 4-5 months.

The longer leading indicator reached a trough in December 2013, with the shorter version following in February 2014. This suggested that global industrial output growth would recover from mid-2014. Weakness, in fact, extended through August, partly reflecting the impact of Japan’s April sales tax rise – see previous post. Output growth rebounded to its June level in September, however – see first chart.

The short leading indicator was stable in September at its highest level since November 2013, while the longer version edged down. Based on the average lead times, this suggests that global industrial output growth will recover further during the fourth quarter but will level off around year-end. With the recent growth trough occurring later than expected, however, the next peak could be correspondingly delayed.

Global real narrow money trends are consistent with a moderation in output growth from early 2015 – see previous post.

Within the global aggregate, the Eurozone longer leading indicator continued to recover in September, supporting the positive message from recent stronger real narrow money expansion – second chart.