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Statistics suggest that the economies of many countries — including Canada — are at the bottom of a trough and heading up, the Organization for Economic Co-operation and Development (OECD) reported Monday.
Based on its composite leading indicators (CLIs) — data the OECD collects and uses to try to predict economic turning points six months before they happen — the group said the outlook improved in April.
Monthly CLIs "point to a reduced pace of deterioration in most of the OECD economies with stronger signals of a possible trough in Canada, France, Italy and the United Kingdom," the OECD said in a news release.
The economies in Germany, Japan and the United States are also looking up, but outside of the 29-member OECD, "economies still face deteriorating conditions, with the exception of China and India," where there are also early signs of a trough.
The OECD also warned, however, that despite the signs of recovery, "it is still too early to assess whether it is a temporary or a more durable turning point."
Some economists are concerned that recent statistics indicating an upturn are, in fact, just a blip, and the economy will drop again. That is what they call the W-shaped recovery, two declines separated with a temporary upswing.
Other economists are betting on a U or V-shaped recovery. The difference is the duration of the economy plateaus at the bottom of the drop.
The OECD said its CLI rose 0.5 points in April, but was still 8.3 points lower than the same month a year earlier. The CLI for Canada was up 0.4 points, but is 7.6 points below the April 2008 level.
The CLIs are based on economic time-series data that fluctuate with the business cycle, but which precede the business cycle. Five to 10 indicators provide inputs to calculate the CLI for each country.
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