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Released: Tuesday, February 11, 2003

The Conference Board announced today that the leading index for the U.K. decreased 0.7 percent, and the coincident index increased 0.2 percent in December.

  • After posting its third consecutive decline in December, the leading index has now been down in four of the last six months. Lower confidence among consumers, a declining volume of expected output, fewer house buildings being started, and declining stock prices are the primary components driving the index down.
  • The coincident index, a measure of current economic conditions, has increased for six consecutive months through December, continuing its upward trend. Moreover, the six-month growth rate of the coincident index is the highest in the last year and a half.
  • The weakness in the leading indicators has not yet become widespread as shown by the six-month diffusion index of leading indicators still registering above 50 percent despite falling recently. However, the performance of the leading index raises concern about the continued pace of economic activity in the coming months in the U.K.

Leading Indicators. Six of the nine components that make up the leading index decreased in December. The negative contributors—from the largest negative contributor to the smallest—are consumer confidence, the volume of expected output, housing starts, stock prices, order book volume, and new orders for engineering industries*. The two positive contributors to the index—beginning with the larger positive contributor—are the fixed interest price index and productivity for the whole economy*. Operating surplus of corporations* was unchanged in December.

With the 0.7 percent decrease in December, the leading index now stands at 124.2 (1990=100). Based on revised data, this index decreased 0.4 percent in November and decreased 0.2 percent in October. During the six-month span through December, the leading index decreased 0.9 percent with five of the nine components advancing (diffusion index, six-month span equals 55.6 percent).

Coincident Indicators. Three of the four components that make up the coincident index increased in December. The positive contributors, beginning with the largest positive contributor, are employment*, retail sales, and real household disposable income*. Industrial production decreased in December.

Increasing 0.2 percent in December, the coincident index now stands at 113.9 (1990=100). Based on revised data, this index increased 0.1 percent in November and increased 0.2 percent in October. During the six-month period through December, the coincident index increased 1.1 percent, with all four of the components advancing (diffusion index, six-month span equals 100 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 February 10, 2003. Some series are estimated as noted below.

*Notes: Series in the leading index that are based on The Conference Board estimates are housing building starts, 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 industrial production, 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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