Global Leading Indicators

This month’s release of the composite economic indexes incorporates annual benchmark revisions which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

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 decreased by 0.6 percent in November 2022 to 78.9 (2016=100), following a 0.9 percent decline in October. The LEI for the UK contracted by 4.6 in the six-month period ending in November 2022, deeper than its 0.5 percent contraction rate over the previous six-month between November 2021 and May 2022.

The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom remained unchanged in November 2022 at 103.8 (2016=100), after ticking up by 0.1 percent in October. The CEI for the UK contracted by 0.4 percent in the six-month period from May to November 2022, after declining by 0.1 percent over the previous six-month period.

“The UK LEI fell further in November, marking a nine-month contraction since March 2022, pointing to continuing recession risks in the near term,” said Allen Li, Associate Economist at The Conference Board. “Weak housing sales expectations and consumer confidence remain a drag on the LEI. High inflation, tighter monetary policy, and a pessimistic consumer will weigh on the UK economy in 2023. The Conference Board forecasts that the UK economy contracted by 0.8 percent in Q4 2022, and real GDP is projected to fall by 0.8 percent year-over-year in 2023.”

Weak housing sales expectations and consumer confidence remain a drag on the LEI

Widespread weakness in the LEI points to continued recession risk in the UK economy 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 -2.6 percent. The red dotted line is drawn at the threshold value (measured by the median, -2.6 percent) on the months when both criteria are met simultaneously. Thus, the red dots signal a recession.

The composite business cycle indexes pre- and post- benchmark revisions: 1970-present 

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

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