Current Period Performance of OECD Composite Leading Indicators (CLIs)

This paper presents a comprehensive analysis of the current period performance of the OECDcomposite leading indicators (CLIs) for 21 OECD Member countries and three zone aggregates (OECDarea, Euro area and Major Seven countries) for which CLIs are available for a longer time period. Therevisions analysis of OECD CLIs is similar to those recently undertaken by the Organisation for a range ofquantitative short-term economic indicators. The aim of the current analysis on CLIs is to further evaluatethe quality of the indicator in order to: identify areas where their reliability could be improved and providefurther information to users on their use for economic analyses.The results show that first estimates of CLIs are revised frequently but the size of revisions israther small for most countries and almost neglectable for zone aggregates and there is no evidence of bias.They also indicate that there is an improvement in the reliability of the second estimates.The OECD CLI is, however, designed to provide early signals of turning points (peaks andtroughs) between expansions and slowdowns of economic activity. It provides qualitative information onshort-term economic movements rather than quantitative measures. Therefore, the main message of CLImovements over time is the direction up or down rather than levels. A simple measure which considers thedirection is the sign of the movements. The results show that for almost all the countries, around 90% ofthe time the sign of the initial estimates of year-on-year growth rates and the 6 month rate of change are thesame as the ones published one month later. So the initial estimate can be considered as a good indicator ofwhether economic activity will move up or down in the near term future...

OECD Statistics Working Papers

Current Period Performance of OECD Composite Leading Indicators (CLIs)

Revision analysis of CLIs for OECD Member countries