Global* short- and longer-term leading indicators** support the forecast here that six-month industrial output growth will pick up from a trough to be reached in the late spring.
The two indicators have led growth turning points by 2-3 months and 4-5 months respectively in recent years. The longer-term measure peaked in July-August 2013 while the short indicator topped in August-September. Global six-month industrial output growth reached a maximum in November-December, falling again in February, based on data covering 75% of the aggregate monitored here – see first chart.
The longer-term indicator, however, recovered in February while the short measure stabilised. This suggests that output growth will decline further to a trough in May before rebounding into the summer.
The rise in the longer-term leading indicator confirms an earlier positive signal from global real narrow money expansion, which bottomed in November 2013 and has picked up strongly in early 2014 – second chart and previous post. The summer growth rebound, in other words, is likely to be significant and sustained into late 2014.
*”Global” = G7 developed economies and E7 emerging economies.
**The indicators are calculated by transforming and combining the OECD’s country leading indices. The message from these derived indicators often disagrees with the OECD’s interpretation of its own data.
