Europe Decelerating Quickly, Asia Showing Better Momentum (2/2)

Looking at the breakdown of the OECD's leading indices, Japan was the only major OECD country in July showing "stable growth" in July as opposed to "growth losing momentum" for the vast majority.

• Europe's Big 4 ( Germany, France, Italy, UK) peaked later and appear to be losing economic momentum more quickly the US (though both leading indicators suggest below-trend growth is in the offing).
• Leading indicators for Asia's Big 5 (China, India, Indonesia, Japan and Korea) have seen its deceleration slowing a bit: apart from Japan, the OECD cites a stable growth outlook in India, with the leading index still declining in China "though showing signs of stabilisation" (note the slowly flattening slope of China's line in the chart below).
• The OECD takes care to note that the leading indices are pointing to the direction of travel for growth rather than necessarily magnitude, and current readings are unusually prone to volatility: "Persisting uncertainties related to the war in Ukraine, renewed COVID-19 threats, supply chain disruptions and the impact of high inflation on real household income are resulting in larger-than-usual fluctuations in the CLI components. As a result, the indicators should be interpreted with care and their magnitude should be regarded as an indication of the strength of the signal rather than as a measure of growth in economic activity."

Source: OECD, MNI