TCB CEI for the U.K. also decreased in January, driven by industrial production which has been declining since early 2008. However, the strengths and weaknesses among the coincident indicators have remained balanced in recent months. The six-month change in TCB CEI for the U.K. has fallen to –0.3 percent (a –0.6 percent annual rate), a reversal from the increase of 0.2 percent (a 0.4 percent annual rate) for the previous six months. Meanwhile, real GDP fell at a 4.4 percent average annual rate in the second half of 2008 (contracting at a 5.9 percent annual rate during the fourth quarter), the lowest two quarter growth rate since 1980.
TCB LEI for the U.K. has been on a downward trend for a year and a half now, amid widespread weakness among its components. The combination of the duration, depth and diffusion of the decline in TCB LEI for the U.K has not been this severe since the recession in the beginning of the 1980s. At the same time, TCB CEI for the U.K. has also been declining since the middle of 2008, albeit at a more gradual pace. Taken together, the behavior of the composite economic indexes suggests that economic activity will continue to contract in the near term.
LEADING INDICATORS
Three of the seven components that make up TCB LEI for the U.K. increased in January. The positive contributors - from the largest positive contributor to the allest - were the yield spread, productivity for the whole economy, and stock prices. The negative contributors - from the largest negative contributor to the smallest - were consumer confidence, the volume of expected output, order book volume, and operating surplus of corporations.
With the 0.4 percent decrease in January, TCB LEI for the U.K. now stands at 93.1 (2004=100). Based on revised data, this index declined 0.7 percent in December and declined 1.2 percent in November. During the six-month span through January, TCB LEI for the U.K. decreased 5.9 percent, with one of the seven components advancing (diffusion index, six-month span equals 21.4 percent).
COINCIDENT INDICATORS
Three of the four components that make up TCB CEI for the U.K. increased in January. The positive contributors - from the largest positive contributor to the smallest – were retail sales, employment, and real household disposable income. Industrial production declined in January.
With the decrease of 0.1 percent in January, TCB CEI for the U.K. now stands at 103.7 (2004=100). Based on revised data, this index increased 0.1 percent in December and decreased 0.2 percent in November. During the six-month period through January, TCB CEI for the U.K. decreased -0.3 percent, with two of the four components advancing (diffusion index, six-month span equals 50.0 percent).
