The U.S. is set for steady economic growth, while the U.K. and Russia appear to be heading for slowdowns, according to leading indicators released Tuesday by the Organization for Economic Cooperation and Development.
The leading indicator for the U.S. was unchanged at 99.7 for the third straight month, signaling that its growth outlook has steadied, albeit at a weaker rate than normal. This is an improvement on indicators published in July, which hinted at a U.S. slowdown, and implies global economic prospects could be boosted as U.S. trade flows pick up.
The OECD data was based on the organisation's composite leading indicators which point to "turning points in economic activity" with a six- to nine-month outlook.
The Paris-based research body's gauge of future activity, based on data for June, continued to point to faster growth in Germany, France, China and Brazil.
The leading indicators suggest global economic growth is on course to pick up in 2017 and maintain that slightly stronger rate of growth into 2018. These indicators are designed to provide early signals of turning points between the expansion and slowdown of economic activity and are based on data series that have a history of anticipating such swings. The changes signaled usually follow six to nine months later.
The OECD is made up of 35 member countries. The organisation seeks to foster prosperity and fight poverty through economic growth and financial stability, according to its website. The OECD area as a whole is expected to show "stable growth momentum," it said.
The OECD's composite leading indicator for its 34 member countries was steady at 100. A reading below 100 indicates growth that is slower than normal.
Across the Group of 20 largest economies, which account for most of the world's output, growth firmed in the final three months of 2016 and stayed at that faster pace in the first three months of 2017.
Growth figures for the second quarter are incomplete, but those available for the U.S., the eurozone and China point to a further pickup. Indeed, Capital Economics estimates that on an annualized basis, global economic growth accelerated to 3.7% in the three months to June from 3.2% in the first quarter.
That acceleration has been mirrored in, and supported by, a recovery in global trade flows in 2017. A separate leading indicator of flows over coming months from the World Trade Organization rose to its highest level in June since the third quarter of 2011.
"Strong growth in export orders, airfreight and container shipping is leading the upward trend in the indicator as economic activity picks up around the world," the WTO said.
In the early months of 2017, the leading indicators pointed to a pickup in U.S. growth. Then, economists, investors and businesses expected to see increases in investment spending and tax cuts under the newly installed administration of President Donald Trump.
But while those hopes have faded, the surprise acceleration in eurozone growth and a steadier expansion in China have helped keep the global economy on track for a stronger 2017.
Meanwhile, the United Kingdom declined to 99.6 from 99.8, the OECD said. The UK "economy is projected to slow in 2017 and 2018, owing to uncertainty about the outcome of the Brexit negotiations," the OECD said in June. "The uncertainty, and the assumed outcome, is projected to undermine spending, in particular investment."
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