The outlook for the global economy is continuing to fade, suggest National Bank Financial economists in a research note published today.

The report notes that data that has just been released by the OECD showed the leading economic indicator of the industrialized countries declining in July for the second consecutive month. “The cresting of the six-month change in the leading indicator suggests that momentum is about to slow in the industrialized countries for the third time in four years,” it says.

“The July report also suggests that the various measures implemented by the Chinese authorities in recent months to slow economic growth are beginning to bite,” NBF adds.

“Continued actions by China to slow its economy (particularly in resource-intensive sectors) will combine with sluggish U.S. growth to slow the pace of global expansion and soften commodity prices,” it predicts.

NBF says that its baseline forecast, “remains one of global cooling, with growth decelerating to 3.9% in 2007 from 4.9% in 2006.”