Global Leading Indicators

About the Leading Economic Index and the Coincident Economic Index:

The Leading Economic Index provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The Coincident Economic Index provides an indication of the current state of the economy. Additional details are below.

The Conference Board Leading Economic Index^® (LEI) for the United Kingdom declined by 0.4 percent in May 2023 to 76.5 (2016=100), following a 0.6 percent drop in April. The LEI for the UK contracted by 3.7 percent in the six-month period ending in May 2023, continuing a 4.0 percent decline over the previous six-month period, between May and November 2022.

The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom ticked up by 0.1 percent in May 2023 to 104.6 (2016=100), after remaining flat in April, based on revised data. The CEI for the UK rose by 0.6 percent in the six-month period from November 2022 to May 2023, a reversal from a 0.2 percent decline over the previous six-month period.

“The UK LEI fell again in May, as subdued housing sales expectations and consumer confidence continue to weigh on the composite index, albeit less than last year,” said Allen Li, Associate Economist at The Conference Board. “The LEI reflects downside risks for the UK economy in 2023, resulting from higher interest rates and elevated inflation. The effects of tighter monetary policy should drive inflation lower later this year. The Conference Board forecasts that real GDP in the United Kingdom will grow by a modest 0.3 percent year-over-year in 2023.” 

The LEI for the UK decreased again in May

The UK LEI fell further in May, as weakness in housing and consumer expectations more than offset other positive contributions

The trajectory of the UK LEI remains negative, suggesting risks to economic growth in the near term

Note: The chart illustrates the so-called 3D’s rule which is a reliable rule of thumb to interpret the duration, depth, and diffusion – the 3D’s – of a downward movement in the LEI. Duration refers to how long-lasting a decline in the index is, and depth denotes how large the decline is. Duration and depth are measured by the rate of change of the index over the last six months. Diffusion is a measure of how widespread the decline is (i.e., the diffusion index of the LEI ranges from 0 to 100 and numbers below 50 indicate most of the components are weakening). The 3D’s rule provides signals of impending recessions 1) when the diffusion index falls below the threshold of 50 (denoted by the black dotted line in the chart), and simultaneously 2) when the decline in the index over the most recent six months falls below the threshold of -3.3 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.3 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

About The Conference Board Leading Economic Index^® (LEI) for The United Kingdom: The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by 11 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle.

The eight components of The Conference Board Leading Economic Index^® for The United Kingdom include: Unemployment Claimant Counts, Weekly Working Hours, General Economic Situation, Stock Prices, Yield Spread, Productivity, Total Gross Operating Surplus of Corporations, Housing Sales Expectation.

To access data, please visit: https://data-central.conference-board.org/

About The Conference Board

The Conference Board is the member-driven think tank that delivers Trusted Insights for What’s Ahead^®. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.tcb.org