OECD Indicators Signal US, Euro Zone Economies Firming

Growth conditions firmed in the United States and euro zone countries in December as their economies steadied and showed further encouraging signs of picking up, data from the OECD showed on Friday.

The Organization for Economic Cooperation and Development's composite leading indicator for the United States rose to 115.5 points from 113.5 in November, when it made its first advance since June 2000.

The six-month rate of change for the United States also improved for the second consecutive month, narrowing its negative reading to minus 1.0 from minus 5.2 in November.

Across the Atlantic, the OECD said the euro zone index rose to 111.3 in December from 110.1 in November. The six month rate of change improved for the second month running, rising to minus 1.3 from minus 3.9 in November, the OECD said in a statement.

Economists regard the index as a good way of predicting turns in the business cycle six months or so in the future and they especially look to the six month rate of change as a guide.

They say that a period of three consecutive months of consecutively rising or falling numbers is usually needed before a change in the trend can be predicted with any confidence.

The OECD's composite leading indicator is an aggregated index of many components. It is not a traditional index with a base year equal to 100, rather a dynamic ratio of differing growth rates for individual components that are calculated each month, with reference to the previous month.

The OECD report adds to signs of economic recovery in the world's biggest economy.

The U.S. Labor Department said on Thursday the number of U.S. workers seeking jobless aid fell last week in a report suggesting the worst of the labour market's deterioration might be over.

The OECD figures also pointed to better times ahead for the euro zone, which was dragged down by the drop in U.S. economic growth last year and the shock of the Sept. 11 attacks in New York and Washington.

Data from the bloc's biggest economy Germany on Friday showed that industrial output there rose by an unexpectedly strong 1.9 percent in December, the latest sign that it may be clawing its way out of recession.

In Japan, the world's second-largest economy after the United States, the OECD index edged up to 105.4 in December from 105.1 in November. The six month rate of change also improved, with the negative reading narrowing to minus 0.4 from minus 1.4.

But in Britain, the index continued a downward trend seen since August, slipping to 107.7 in December from 107.9 in November. The six-month rate of change improved for the first time since February 2000 to record minus 5.0 from minus 5.2 in November.

Last month OECD chief economist Ignazio Visco told reporters at a convention in Rome that there would be a strong world recovery in the second quarter of 2002