Economic Outlook: A tentative recovery

Leading indicators for three battered European economies show signs of improvement, the Organization for Economic Cooperation and Development said.

In Italy, France and Britain, leading indicators showed tentative signs of, at least, a pause in the economic slowdown, the OECD said Monday. Leading indicators also showed signs of improvement in China, where stimulus spending has increased lending and investments in factories.

President of the Central European Bank Jean-Claude Trichet also spoke cautiously of a possible upturn, pointing out some economies had reached an inflection point, a suggestion that a turnaround was on the way.

The global crisis is widely viewed as starting in the United States, but few doubt an isolated recovery is feasible. In Britain, where home prices dropped dramatically in the past 16 months, signs of market stabilization and even competitive home buying has begun to emerge in recent data.

The OECD report was not universally upbeat. The Composite Index for the 30-country OECD area pointed down 0.1 points in March, reflecting a 9.5 point decline from a year ago. At 92.2, it remains well below the 100 point break-even mark.

Leading indicators for the five largest Asian economies — China, India, Japan, Indonesia and Korea — also came in at 92.2. In the Euro area, leading indicators rose slightly to 94.2. In the United States, the composite indicators fell slightly to 89.9.

Declines were noted in Canada, Japan and Germany. Russia’s leading index fell to 84.9. In China, it rose to 93.

Finding a bottom to a crash requires finesse, but labeling it one requires chutzpah. Trichet said a week ago that economic activity is likely to be very weak for the remainder of this year, before gradually recovering in course of 2010, the Financial Times reported. And recent data showed industrial production in Italy and France shrank in March compared to April. The OECD put it poetically, pointing to signs of a pause, putting France, Italy and Britain in a possible trough, rather than a definitive one.