The OECD’s leading indicators support the signal from monetary trends that global industrial momentum is probably bottoming but will remain weak into 2020.

The chart shows the six-month rate of change of a global leading indicator derived from the OECD’s country indicators for the G7 and major emerging economies. Turning points in this rate of change have led turning points in six-month industrial output momentum by five months on average historically.

The six-month leading indicator change bottomed in February, suggesting a Q3 low in industrial output momentum. This accords with the signal from six-month real narrow money growth, which bottomed in November 2019 and leads by nine months on average.

The growth rates of the leading indicator and real narrow money were still low in August, consistent with economic momentum remaining weak through January and May 2019 respectively. Real money growth, however, is expected to have picked up significantly in September – a preliminary estimate will be available by early next week.