Sunil Jain: Weeds, not shoots

How many indicators need to be positive, and for how long, for an upturn to be a, well, upturn? No one doubts several indicators — interest spreads, consumer confidence, stock markets, and more — are turning positive, but are these green shoots, or weeds? The Boston Consulting Group (BCG) has analysed a total of 61 indicators for the US, the UK, France, Germany and Japan and finds that less than 10 per cent of these indicators are clearly positive (they’ve recovered to 2007 levels and have grown consistently for more than 3 months.

About a quarter showed a positive trend but for less than three months; about 60 per cent showed a deceleration in the rate of decline and another 8 per cent continued to show a negative trend. Among the group that showed an upturn (even if for less than three months), around half were driven by monetary policy (such as lower interest rates) — less than a quarter of non-policy-led indicators have shown any positive trend. Signals of consumer demand, BCG points out, are largely in the third and fourth groups — these either continue to fall or are just slowing a deceleration in the rate of decline.