Global Leading Indicators

For more information, please visit https://www.conference-board.org/topics/business-cycle-indicators/ or contact us at indicators@conference-board.org.

The Conference Board Leading Economic Index^® (LEI) for the United Kingdom declined by 0.5 percent in October 2023 to 73.4 (2016=100), following a 0.4 percent decrease in September. The LEI for the UK contracted by 4.1 percent in the six-month period ending in October 2023, the same rate of decline as over the previous six-month period from October 2022 to April 2023.

The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom ticked up by 0.1 percent in October 2023 to 104.5 (2016=100), after being unchanged in September. The CEI for the UK slid by 0.1 percent in the six-month period from April to October 2023, a reversal from the 0.7 percent increase over the previous six-month period.

“The UK LEI declined in October, continuing a downtrend that began in March 2022,” said Allen Li, Associate Economist at The Conference Board. “In October, the components of the UK LEI remained weak across the board, led by housing sales expectations and consumer’s assessment of general economic conditions. The UK LEI has remained below its long-term trend for all of 2023, continually suggesting recession risks to the economy. Inflation remains elevated despite easing steadily from its peak and interest rates look to be restrictive in the near term. Nonetheless, The Conference Board currently expects that real GDP in the United Kingdom will expand by a tepid 0.4 percent year-over-year in 2023, but look to pick up slightly to 0.9 percent growth in 2024.”

The UK LEI declined in October

The UK LEI showed a continuation of weakness in October, led by housing sales expectations and consumer’s assessment of the general economic situation

The growth rate of the UK LEI has been below its long-term trend for over a year, and signaling possible recession 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 -3.5 percent. The red dotted line is drawn at the threshold value (measured by the median, -3.5 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