OECD Indicators Signal Slowdowns in US and UK

By Paul Hannon Features Dow Jones Newswires

A substantial acceleration in global economic growth has become less likely this year as the outlooks for the U.S., U.K. and Russia have weakened, according to leading indicators released Monday by the Organization for Economic Cooperation and Development.

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The Paris-based research body's gauges of future activity, based on data for May, pointed to faster growth in France and China. But that positive news was offset by "tentative" signs of a slowdown in the world's largest economy, as well as the U.K., Italy and Russia.

Economic growth is still likely to pick up this year, but not to the same degree as previously anticipated. In a statement issued Saturday at the conclusion of their two-day meeting in Hamburg, Germany, leaders from the Group of 20 largest economies said that while prospects are "encouraging," "the pace of growth is still weaker than desirable."

In the early months of this year, the leading indicators pointed to a pickup in U.S. growth. Economists, investors and businesses then expected to see some increases in investment spending and cuts in taxes under the then newly installed administration of President Donald Trump.

But those hopes have faded, as have expectations of a big bounce back in growth from a weak first quarter.

Meanwhile, the U.K. appears to be suffering from a slowdown in consumer spending in response to a jump in inflation linked to the pound's depreciation in the wake of a June 2016 vote to leave the European Union.

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The OECD's leading indicators are designed to provide early signals of turning points between the expansion and slowdown of economic activity, and are based on a variety of data series that have a history of anticipating swings in future economic activity. The changes in economic activity signaled by the indicators usually follow six to nine months after they are recorded.

The OECD's composite leading indicator for its 34 members was steady at 100.0 in May. A reading below 100.0 points to growth that is slower than normal.

Write to Paul Hannon at paul.hannon@wsj.com

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July 10, 2017 06:14 ET (10:14 GMT)