Indications from the first half of the year suggested that the present cyclical expansion was starting to slow in much of the OECD. The pace of activity moderated particularly sharply in North America. Canadian GDP fell slightly in the second quarter of the year and inventory levels rose considerably. Trade growth was also lower than expected, although this partially reflected the regional impact of recent developments in Mexico. Within Europe, GDP growth slowed in the UK, France and Italy, although growth proved unexpectedly robust in a number of the smaller economies, particularly Ireland, Sweden and Finland. Output also continued to grow sharply in Australia and South East Asia.