The Conference Board CEI for the U.K., a measure of current economic activity, decreased in August after remaining flat during the previous two months. Between February and August 2009, the coincident economic index decreased by 0.6 percent (about a -1.2 percent annual rate), slower than the 1.1 percent decline (about a -2.1 percent annual rate) for the previous six months. Additionally, the strengths and weaknesses among the coincident indicators have remained balanced in recent months. Meanwhile, real GDP contracted at a 2.3 percent annual rate during the second quarter of 2009, following a decline of 9.6 percent annual rate during the first quarter.
After falling steadily between the middle of 2007 and the first quarter of 2009, The Conference Board LEI for the U.K. has risen sharply during the past five months. As a result, its six-month growth rate has reached its highest level since 1999. The Conference Board CEI for the U.K. has stabilized during the last three months, after declining rapidly between December 2008 and May 2009. Taken together, the recent behavior of the composite indexes suggests that the downturn in economic activity is bottoming out and that the economy is probably moving closer to a recovery.
LEADING INDICATORS
Six of the seven components that make up The Conference Board LEI for the U.K. increased in August. The positive contributors – from the largest positive contributor to the smallest – were stock prices, the yield spread, volume of expected output, consumer confidence, productivity for the whole economy and order book volume. Operating surplus of corporations was the only negative contributor in August.
With the 0.9 percent increase in August, The Conference Board LEI for the U.K. now stands at 94.0 (2004=100). Based on revised data, this index increased 0.5 percent in July and increased 1.1 percent in June. During the six-month span through August, the leading economic index increased 3.6 percent, with five of the seven components advancing (diffusion index, six-month span equals 71.4 percent).
COINCIDENT INDICATORS
Two of the four components that make up The Conference Board CEI for the U.K. increased in August. The positive contributors – from the largest positive contributor to the smallest – were real household disposable income and employment. Industrial production declined in August while retail sales remained unchanged.
With the decrease of 0.1 percent in August, The Conference Board CEI for the U.K. now stands at 102.3 (2004=100). Based on revised data, this index remained unchanged in both July and June. During the six-month period through August, the coincident economic index decreased 0.6 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).
