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Benchmark Revisions - July 2007

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Released: Wednesday, June 13, 2007

Next month's release of the UK LEADING ECONOMIC INDICATORS AND RELATED COMPOSITE INDEXES, scheduled for July 10, 2007, will incorporate benchmark revisions to the composite indexes which will bring them up-to-date with revisions in the source data and update the standardization factors used in their calculation. The composite indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the annual benchmark revision is made and the entire histories of the indexes are recomputed. This is a maintenance procedure typically done once a year, which usually does not change the cyclical properties of the indexes and has, as expected, relatively small effects.

The next release will also incorporate major revisions to the composite index of economic indicators (LEI): 1) a new component, interest rate spread, will be used in the composition of the LEI and will replace the discontinued fixed income price index series, 2) the LEI methodology will incorporate a trend adjustment, and 3) another discontinued component, new orders for engineering industries, will be omitted from the LEI. The new measure of the yield spread improves the performance of the LEI by better reflecting the way the yield spread anticipates cyclical economic turning points. The trend adjustment facilitates interpretation and use of the LEI.

For more details, please see page 3. For more information visit our web site at http://www.conference-board.org/economics/bci/.

The Conference Board announced today that the leading index for the U.K increased 0.6 percent, and the coincident index increased 0.1 percent in April.

  • The leading index increased sharply in April, the fourth consecutive increase. The largest contributor to this gain was again order book volume, followed by stock prices and volume of expected output. The growth of the leading index continued to accelerate; the index rose about 2.2 percent from October to April (a 4.5 percent annual rate), picking up from a six-month growth rate of about 2.5 percent (annual rate) at the end of 2006, but this is still below the 5.3 percent annual rate in mid-2006. In addition, the strengths among the leading indicators have been somewhat more widespread than the weaknesses in recent months.
  • The coincident index increased slightly in April, continuing on a slow growth trend since mid-2006, and this index of current economic activity has seen little or no growth since October 2006. However, in April, the strengths were more widespread than the weaknesses among the coincident indicators. At the same time, real GDP grew at almost a 3.0 percent annual rate in the first quarter, down from about a 3.4 percent rate in the first quarter of 2006. The recent improvement in the leading index suggests moderate economic growth is likely to continue, and perhaps pick up slightly, in the near term.

LEADING INDICATORS. Five of the eight components that make up the leading index increased in April. The positive contributors — from the largest positive contributor to the smallest — were order book volume, stock prices, volume of expected output, productivity for the whole economy*, and consumer confidence. The negative contributors — from the largest contributor to the smallest — were the fixed interest price index* and new orders for engineering industries*. Operating surplus of corporations* remained unchanged in April.

With the 0.6 percent increase in April, the leading index now stands at 141.7 (1990=100). Based on revised data, this index increased 0.4 percent in March and increased 0.8 percent in February. During the six-month span through April, the leading index increased 2.2 percent, with five of the eight components advancing (diffusion index, six-month span equals 62.5 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in April. The positive contributors — from the largest positive contributor to the smallest — were employment *, real household disposable income*, and industrial production. Retail sales remained unchanged in April.

With the increase of 0.1 percent in April, the coincident index now stands at 117.1 (1990=100). Based on revised data, this index increased 0.1 percent in March and increased 0.1 percent in February. During the six-month period through April, the coincident index increased 0.1 percent, with three of the four components advancing (diffusion index, six-month span equals 87.5 percent).

DATA AVAILABILITY: The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on June 12, 2007. Some series are estimated as noted below.

* Series in the leading index that are based on The Conference Board estimates are fixed interest price index, new orders in engineering industries, productivity of the whole economy, and operating surplus of corporations. Series in the coincident index that are based on The Conference Board estimates are employment and real household disposable income.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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