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Growth trend indicators – CLIs by OECD

CLIs (Composite Leading Indicators) are a tool that I recently discovered. They are used to “provide early signals of turning points in business cycles”. It is a forecast which pretends to predict the moment in which the bubble will be in the highest point and the moment in which that bubble will go off.

They are identified by the OECD itself as a quantitative information rather than qualitative with components that measure early stages of production and that respond rapidly to changes in economic activity. Therefore, it can be useful to know if an economic cycle is finishing or if it just has started.

In the last release, the indicators show what the last big data had announced: the United States grow firmly and fulfilling the forecast, while in the Euro area the growth now starts to gain momentum.

CLI 06.2013

This can be considered as another tool that the management has to make decisions. It can help to decide whether it is the moment to invest taking into account the forecast, which anticipates turning points 6-9 months before they happen, or if a certain country is facing a change in the cycle.

Would you like to deepen in this topic, you can visit OECD site and view the attached video.

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