The OECD calculates leading indices every month for a large number of countries. Chart 5 below shows the year-on-year change in the leading indices for the UK, the US, Europe, and Japan, as well as the four BRIC countries. It can be seen that the average growth rate over the last five or so years has been considerably lower than the 6% or so rate that prevailed prior to the 2008 financial crisis. However, it is still positive at around 2% and appears to be stabilising. This stabilisation is evident in chart 6 below which shows the rate of change of the rate of change of the average (known as “the second derivative”). I would suggest that this is an improvement that has yet to be fully appreciated by equity markets.
Published in Investment Letter, May 2016
The views expressed in this communication are those of Peter Elston at the time of writing and are subject to change without notice. They do not constitute investment advice and whilst all reasonable efforts have been used to ensure the accuracy of the information contained in this communication, the reliability, completeness or accuracy of the content cannot be guaranteed. This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.