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Latest leading indicators from the OECD

David McEwen

Wednesday 30th November 2011

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Latest leading indicators from the OECD show more good news for New Zealand, but little joy for other countries.

The figures for New Zealand, which combine statistics for various sectors that point to changes in the overall economy for up to 12 months ahead, have been rising steadily throughout 2011.

This goes against the trend in the rest of the world and probably is being caused by strong food prices. Since the rest of the world is more industrial than clean, green New Zealand, our economic cycle tends to be different from other countries.

The country showing the worst figures is the UK, where the indicators have been trending down since May 2010. However, the rate of decline has been picking up in recent months and this does not bode well for that country’s economy, which already is implementing austerity measures.

The rest of Europe and the US have also seen downturns.

China has had a gradual decline, which appears to be in keeping with the government’s desire there to engineer a ‘soft landing’ for its economy in order to keep a lid on speculation and inflation.
In Australia, the indicators are showing a gradual upturn after a few months of decline. Its reliance upon resources means it is vulnerable to global growth and this pattern appears in keeping with impacts upon demand for important industrial minerals and energy.

The good news for investors is that, while the rest of the world might slow down in 2012, New Zealand and Australia are sitting pretty comfortably.

That offers encouragement to share market investors, and suggests that increasing exposure is a worthwhile venture.

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