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 0.3 percent in January 2024 to 75.5 (2016=100), following a 0.3 percent decrease in December 2023. The LEI for the UK contracted by 2.7 percent between July 2023 and January 2024, a slower rate of decline than the contraction of 4.8 percent over the previous six-month period.  

 The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom increased by 0.2 percent in January 2024 to 104.7 (2016=100), after remaining unchanged in December 2023. Over the six-month period between July 2023 and January 2024, the CEI for UK rose by 0.6 percent, a faster rate than over the previous six-month period when it grew by 0.3 percent.

 “The UK LEI declined again in January, but the pace of declines moderated in recent months,” said Allen Li, Associate Economist at The Conference Board. “Negative contributions from cooling labor market components and the yield spread drove the January decline. However, consumers’ assessment of the general economic situation and housing sales expectations have improved measurably since July 2023. The slowing rate of decline in the LEI suggests that headwinds to economic growth in the United Kingdom may ease, paving the way for a modest recovery in 2024 after a recession in the second half of 2023. The Conference Board currently projects that annual real GDP growth will pick up slightly in 2024, to 0.4 percent.”

The UK LEI declined again in January

In January, the yield spread and labor market components of the UK LEI drove the decline

The growth rate of the UK LEI remains below its long-term trend, still signaling recession risks 

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 -4.0 percent. The red dotted line is drawn at the threshold value (measured by the median, -4.0 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. ConferenceBoard.org