08/04/2020 - The CLIs for March 2020 recorded the largest drop on record in most major economies in line with the considerable economic shock caused by the COVID-19 pandemic and its immediate impact on production, consumption and confidence in the wake of lockdown measures.
Over the next few months, in particular, care will be needed in interpreting the CLI.
Sharp slowdown in the OECD area
|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.|
 The CLI is optimised to identify turning points and not for judging the speed or strength of a recovery or downturn in the business cycle; and users should not interpret it in this way. A very high or low CLI for example cannot be interpreted as an indication of very high or low levels of economic activity or growth. It merely provides a strong signal of the phase a country is likely to be in its business cycle in the near future. For more information please consult the longer OECD note.
 Clearly, this makes them less useful than we would like them to be at the present juncture but even as a coincident indicator they remain important and useful. Measures of economic activity, such as GDP growth for example, are only at best available one-month after the reference period. In that sense therefore, even as a coincident measure, the CLI retains some of its ‘leading’ properties, allowing us to take the pulse of economies in near to ‘real-time’.
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