Global Leading Indicators Feb 2025 - In the Pipe, for Now

It’s been a while since I’ve been writing about markets and the economy. The reason, as I touched on earlier this month, is that I’ve been working on some scripts—with the help of my now trusty and indispensable ChatGPT+ subscription—to automate chart generation for the indicators and data I use and look at regularly. The first of these, on the OECD’s suite of leading indicators, is now done in its beta version, so let’s get started.

The February 2025 version of the chartbook can be found here. It is updated with the February values for the OECD leading indicators in amplitude- and seasonally-adjusted format. The coincident indicator is based on CPB’s data, and is most recently updated for January.

The upturn continues, but momentum has faded a touch

  • As of February, 10 out of the 16 leading indicators in this sample were still turning up*, which is consistent with a broad-based cyclical upturn. That said, this number is down from a peak of 13 in October last year, and more broadly, the trend by the middle of 2024. Put differently, global LEIs are still turning up in a general sense, but momentum has faded a touch. This, in turn, is confirmed by the upturn in the coincident indicator.

  • The constellation of LEIs is consistent with a cycle that is stable, but also “as good as it gets”. History suggests that it is rare for the LEI diffusion index to rebound to new highs after having reached a peak and fallen back on a three-to-six month basis. This, in turn, would be consistent looming downside risk from global trade uncertainty at the start of Q2. It will be interesting to see whether global LEIs maintain their positive momentum through Spring and into Summer. It is tempting to call a peak in LEIs simply based on the idea that the current duration of the generalised upturn—nine-to-12 months—is on par with the normal duration before LEIs roll over and the global economy, and asset markets, suffer a growth scare. That said, we should be wary saying something will fall just because it is high today. We can’t, a priori, determine what happens next simply by using historical averages of duration spent in upturns and downturns.

  • Across individual countries and regions, the data currently suggest that Japan and Mexico are in outright downturns, with leading indicators below their long-run average and falling. The UK, Brazil and India are in the precarious position of exhibiting leading indicators that are above their long-run average, but now falling on a six-month basis.

  • Among the LEIs in a generalised upturn—above their long-run average and rising on a six-month basis—China, the US, Canada, Turkey, South Africa and Spain exhibit the strongest momentum. By contrast, South Korea, Germany, Australia and Indonesia are closest to falling out of the top right quadrant.

* Defined here as the difference between high and rising LEIs less high and falling LEIs and low and rising LEIs and low and falling LEIs.