World Economy

OECD Says US Economy Flagging

OECD Says US Economy FlaggingOECD Says US Economy Flagging

Economic growth appears to be flagging in the United States and continues to slow in China, while France and Italy are outperforming as the eurozone economy recovers, a monthly OECD measure showed on Tuesday.

The composite leading indicators (CLIs), designed to anticipate economic turning points, signaled stable growth momentum in the OECD area as well as Japan, Germany, Britain and India, the OECD said, Yahoo News reported.

“In the euro area, growth momentum continues to strengthen, particularly in France and Italy. Signs of easing growth momentum are emerging in the United States, although these may reflect transitory factors,” the Paris-based Organization for Economic Cooperation and Development said.

Using the long-term average of 100 as a benchmark, the OECD said its latest monthly CLI indices showed the US economy dipping from 98.8 to 98.6 and China from 98.1 to 97.9.

It has the eurozone steady at 100.7 while within that area Germany held its ground at 99.8, France rose to 100.8 from 100.6 and Italy rose to 101.0 from 100.9. Japan edged to 100.0 from 99.9.

 Recovery Rocky

The payrolls report released last week suggested the US economy is back on trend after a rocky first quarter, and upcoming data will give some sense of whether that’s the case, MarketWatch reported.

The key jobs report from the Labor Department showed 223,000 jobs added in April. That’s by no means terrific, but it looks pretty good compared to the 85,000 reading for March.

And it suggests that factors such as port delays and bad weather that conspired to hold back the economy in the beginning of the year will only make a temporary dent going forward. A nice rise in construction employment in April, of 45,000, helps support that view that better weather will help restore demand.

That said, the strength of the dollar and the pain felt in the energy industry due to the collapse in oil prices could mean that the powerful recovery in 2014’s second quarter won’t be felt this time around. Last year, a 2.1% contraction in the first quarter was followed by a 4.6% surge in the second quarter. Most economists now expect the first quarter of 2015 to have contracted, despite the initial reading of an 0.2% expansion.

“Taken together with other recent data, it now appears that the second quarter growth outlook is better than the first quarter, but headwinds to growth will likely remain,” said economists from Wells Fargo Securities in a note to clients.

Retail sales data due Wednesday will capture the market’s attention. Though sales rose 0.9% in March, that was below the market expectation after three monthly falls.