Wednesday, September 02, 2009
London: Economic analysis from Clarkson suggests that the global economy could be turning the corner but an upturn in industrial activity will lag behind
Clarkson analysts believe that the best indicator of global economic trends is activity in OECD countries because, despite China’s dramatic development, OECD nations still account for about 60% of world imports and 30-40% of exports.
In a recent market report, Clarkson points out that the precipitous drop in the container trades, particularly from China, is testament to the continuing importance of OECD nations and their consumers’ demand. An important measure of economic trends, the analysts suggest, is the OECD’s composite leading indicator (CLI), an index comprising a range of short-term economic variables which signals turning points in economic activity.
There have been nine such turning points in the CLI since January 2000 and each time, OECD industrial output has followed the trend, with a time lag of between four and eight months depending on the depth of the downturn. The most recent downward turning point was in May 2007, the beginning of a deep decline which Clarkson describes as “one of the blackest periods of recent economic history”.
However, early in 2009, the CLI appeared to have reached a new low point and, four months later, was back in positive ground, though only just. Industrial production, Clarksons says, had declined very rapidly and reached “a nadir” soon after the CLI began to regain ground.
Nobody can yet be sure whether these signs are the beginnings of an industrial recovery or not, Clarkson says. Nor can anyone tell whether such a recovery, if it is real, will be long drawn out or rapid. For shipping, however, the key question will be, despite delays and cancellations, whether it can absorb today’s record orderbook. [01/09/09]