Brexit pushes OECD to suspend economic indicators

PARIS — The Organisation for Economic Cooperation and Development (OECD) said Monday it is suspending for two months its composite leading indicators (CLIs) designed to flag turning points in economic activity due to volatility heightened by Brexit.

The OCED compiles the indicators to provide a useful tool to measure expectations of future economic activity, but it said "extreme volatility such as the financial crisis and the recent euro area crisis" reduced their effectiveness.

They cannot account "for significant unforeseen or unexpected events, for example natural disasters, such as the earthquake, and subsequent events that affected Japan in March 2011", which likewise saw CLI data suspended for two months.

"The outcome of the recent referendum in the United Kingdom is another such significant unexpected event, which is affecting the underlying expectation and outturn indicators used to construct the CLIs regularly published by the OECD," the organisation said.

The OECD added that, in the volatile post-referendum context, the underlying data that capture subsequent and potentially significant changes in expectations will not be available until early September. 

"As a consequence, to avoid providing an inaccurate and potentially misleading assessment of the short to medium term outlook, it has been decided to suspend the release of the OECD CLIs until 8 September 2016."

Following the referendum, the OECD forecast "major consequences for the UK itself, the EU and the international community”.

It added that, although it would not have recommended a Leave vote "the focus must now shift to dealing with the outcome of this democratic process" to ensure the transition period is as smooth as possible.