LEI for the United Kingdom Declined in February

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 February 2024 to 75.8 (2016=100), after being unchanged in the previous two months according to revised data. The LEI for the UK contracted by 1.6 percent between August 2023 and February 2024, a much slower rate of decline than the contraction of 5.1 percent over the previous six-month period.

The Conference Board Coincident Economic Index^® (CEI) for the United Kingdom increased by 0.2 percent in February 2024 to 104.9 (2016=100), after increasing by 0.3 percent in January. Over the six-month period between August 2023 and February 2024, the CEI for UK rose by 0.6 percent, slightly faster than the 0.4 percent growth over the previous six-month period.

"The UK LEI declined in February, but the six-month pace of decline has been moderating in recent months," said Allen Li, Associate Economist at The Conference Board. "In addition, fewer components have been declining, with working hours and share prices seeing improvement in recent months. Overall, this suggests that headwinds to economic growth in the United Kingdom may start easing later in the year. The Conference Board currently projects that annual real GDP growth will pick up slightly in 2024 to 0.4 percent, largely thanks to expected rate cuts."

The UK LEI declined in February

Only half of the components of the UK LEI declined in February

The six-month growth rate of the UK LEI remains negative, but rose above its recession signal threshold in February

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.

AboutThe 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

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