Leading indicators still point to recovery

The global economic recovery is likely to continue over the next few months although employment in the United States is continuing to contract.

On Friday, most economists focused their attention on the US employment report. This report was somewhat of a disappointment, with employment reportedly falling 190,000 in October and the unemployment rate rising to 10.2 percent.

Nevertheless, there were some positives in the report. The total number of jobs in August and September were revised up by 91,000. Also, the number of temporary workers rose by 34,000 in October. The latter may be significant because the trend for temporary employment often leads that for overall employment.

However, a better indication of where economies are headed can be obtained from several composite leading indices that were also released on Friday.

The Organisation for Economic Co-operation and Development published its composite leading indicators (CLI) for September on Friday. According to its report, the CLI for the OECD area increased by 1.3 points in September 2009, with recovery "clearly visible" in the United States, Japan and all other OECD economies and major non-OECD economies.

Also out on Friday was the Economic Cycle Research Institute's weekly leading index for the US economy. This rose to 128.8 in the week to 30 October from 128.3 the previous week. The index's growth rate, however, fell to 26.3 percent from 26.9 percent last week, although it remains close to a record high of 27.8 seen in the week to 9 October.

In Japan, the Cabinet Office published its preliminary indexes of business conditions for September on Friday. The index of coincident economic indicators rose 1.3 points in September, its sixth consecutive increase. The index of leading economic indicators rose 3.2 points, its seventh consecutive month of increase.

So although the US economy is continuing to lose jobs, the global economic recovery appears intact for now.