Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for the United Kingdom declined by 0.6 percent in January 2023 to 78.8 (2016=100), following a 0.8 percent drop in December 2022. The LEI for the UK contracted by 3.4 percent in the six-month period ending in January 2023, an accelerated rate from its 2.4 percent contraction over the previous six-month period, between January and July 2022.

The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom ticked up by 0.1 percent in January 2023 to 104.0 (2016=100), after remaining unchanged in December. The CEI for the UK grew by 0.1 percent in the six-month period from July to January 2023, after a decline of 0.2 percent over the previous six-month period.

“The UK LEI fell again in January and has been on a declining trend for 11 months. The data confirm continued downside risks for U.K. economy in 2023,” said Allen Li, Associate Economist at The Conference Board. “Expectations for housing and the overall economy remain depressed. While energy prices may decline to relieve some pressure on consumer’s household finances, overall inflation has yet to fall quickly. The Conference Board forecasts that real GDP in the U.K. will contract by 0.4 percent year-over-year in 2023, an upward revision from a contraction of 0.8 percent previously.” 

The LEI for U.K. fell again in January, continuing its downward trend

Expectations for housing and the overall economy remain depressed

The LEI growth trend remains negative 

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.conference-board.org • Learn more about our mission and becoming a member