The Conference Board announced today that the leading index for the U.K declined 0.1 percent, and the coincident index increased 0.1 percent in October.

The leading index fell slightly in October, after two consecutive increases. The six-month growth rate of the leading index has been declining gradually, and the leading index grew 0.7 percent from April to October (about a 1.5 percent annual rate), down from growth of almost 5.0 percent annual rate in mid-year. In October, the largest negative contributor to the leading index was order book volume, following large positive contributions in previous months. The strengths and weaknesses among the leading indicators have become somewhat more balanced.

The coincident index increased again in October. This index has been steadily increasing, although its growth has been moderate. Employment has been making the largest positive contributions to the coincident index in recent months, and strengths in the coincident index remain more widespread than weaknesses. At the same time, real GDP grew at a 3.0 percent annual rate in the third quarter, slightly up from about a 2.7 percent annual rate in the first half of 2006. Despite October's slight decline, the improvement in the leading index in 2006 still suggests moderate economic growth should continue in the near term.

LEADING INDICATORS. Five of the eight components that make up the leading index increased in October. The positive contributors — from the largest positive contributor to the smallest — were stock prices, consumer confidence, the fixed interest price index, productivity for the whole economy*, and operating surplus of corporations. The negative contributors — from the largest contributor to the smallest — were order book volume, volume of expected output, and new orders for engineering industries.

With the 0.1 percent decrease in October, the leading index now stands at 137.9 (1990=100). Based on revised data, this index increased 0.4 percent in September and increased 0.4 percent in August. During the six-month span through October, the leading index increased 0.7 percent, with five of the eight components advancing (diffusion index, six-month span equals 62.5 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in October. The positive contributors — from the largest positive contributor to the smallest — were employment *, real household disposable income*, and retail sales. Industrial production remained unchanged in October.

With the increase of 0.1 percent in October, the coincident index now stands at 117.3 (1990=100). Based on revised data, this index increased 0.3 percent in September and remained unchanged in August. During the six-month period through October, the coincident index increased 0.8 percent, with all of the four components advancing (diffusion index, six-month span equals 100.0 percent).