THE influential Organisation for Economic Cooperation and Development's leading indicator for the UK rose in January, following 11 consecutive months of decline, signalling a possibility that renewed recession as early as the current quarter might be avoided.
The OECD's leading composite indicators are designed to anticipate turning points in economic activity relative to trend. The indicator for the UK edged up from 98.73 in December to 98.87 in January.
Although this was ahead of numbers of 98.07 for Germany and 96.56 for Italy, it was behind respective readings of 102.47 and 102.59 for the US and Japan, and a figure of 99.36 for Canada.
The OECD noted its indicators for China continued to point to below-trend expansion in this still fast-growing economy.
Publishing its latest monthly readings, the OECD said: "Composite leading indicators ... continue pointing to a positive change in momentum in the OECD as a whole.
"The United States and Japan continue to drive the overall position but stronger, albeit tentative, signals are beginning to emerge within all other major OECD economies and the euro area as a whole."
Howard Archer, chief UK economist at consultancy IHS Global Insight, noted the leading indicator for the UK, although it dipped between November and December last year, had broadly stabilised at that stage with the drop being only a marginal one from 98.75 to 98.73.
He said: "The improving trend seen at the end of 2011 and start of 2012 boosts hopes that the UK can return to growth in the first quarter and avoid recession after GDP (gross domestic product) contracted 0.2% quarter-on-quarter in the fourth quarter of 2011.
"The gradually improving trend in the OECD indicator ties in with our belief the UK will eke out modest growth in the first quarter, but likely no more than 0.3% quarter-on-quarter."
While citing better economic indicators for the first quarter, he noted there were still signs of weakness.
News in January of the fourth-quarter decline in GDP fuelled fears of renewed recession, defined as two consecutive quarters of contraction.
Mr Archer said: "Overall economic data and surveys for January and February, so far, combined have been modestly improved overall compared to the fourth quarter of 2011. An unexpected drop in industrial production in January and a slowdown in services expansion in February indicated by the purchasing managers (surveys) provided stark reminders the UK economy is not yet out of the woods."
UK industrial production fell by 0.4% in January, official data showed on Friday.
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