German leading indicator also rolling over
Simon Ward
3 Comments
Next week’s update of the OECD’s composite leading indicators is likely to confirm a reversal lower in the US indicator and a further decline in China – see previous post.
July / August numbers for the OECD’s German indicator can also now be estimated, incorporating Ifo business and GfK consumer survey results released earlier this week.
The German indicator was still on a rising trend as of the OECD’s June update released in early July. Subsequent news suggests that the increase has stalled – see chart 1.
Chart 1
The cross-country deterioration in the indicators is further evidence that a synchronised global downswing is under way.
The baseline scenario here remains that downside economic and inflation surprises will trigger a dramatic escalation of monetary policy easing into H1 2025. A subsequent pick-up in money growth will lay the foundation for a H2 2025 / 2026 economic boom.
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Reader Comments (3)
I think we should be particularly concerned about Germany, given IFO is at a similar level to Q3 2008 and the global recession hasn't really started yet.
We can say similar about China and a possible housing and banking crisis there.
We can indeed hope money growth picks up and it seems to be already starting in the US in the same way it did around around mid 2008 and in the recession at the start of the century.
& inflation?
"A subsequent pick-up in money growth will lay the foundation for a H2 2025 / 2026 economic boom."
Edward - money growth wouldn't become "excessive" before mid-2025, suggesting inflationary consequences in 2027.