The Conference Board announced today that the leading index for the U.K increased 0.2 percent, and the coincident index increased 0.1 percent in August.

The leading index increased slightly in August, and there were upward revisions to the previous several months as actual data for productivity for the whole economy for the second quarter of 2006 became available. Despite August's increase, the six month growth rate of the leading index slowed slightly, to about a 3.0 to 4.0 percent annual rate in recent months. However, the strengths among the leading indicators have been somewhat more widespread than weaknesses in recent months.

The coincident index increased again in August. This measure of current economic activity has been on a slightly rising trend since mid-2005, and its growth rate has picked up slightly since the beginning of the year. In addition, the recent strength among the coincident indicators has been widespread.

The recent growth of the leading index is well above the slightly negative rate in the second half of 2005, but it is still below the most recent high of almost 7.0 percent reached in the first half of 2004. At the same time, real GDP grew at a 3.2 percent average annual rate in the first half of 2006, up from the 2.1 percent average rate in the second half of 2005. The current behavior of the leading index suggests that moderate economic growth should continue in the near term.

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

With the 0.2 percent increase in August, the leading index now stands at 137.4 (1990=100). Based on revised data, this index increased 0.1 percent in July and increased 0.4 percent in June. During the six-month span through August, the leading index increased 1.7 percent, with six of the eight components advancing (diffusion index, six-month span equals 75.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up the coincident index increased in August. 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 August.

With the increase of 0.1 percent in August, the coincident index now stands at 117.0 (1990=100). Based on revised data, this index increased 0.1 percent in July and increased 0.2 percent in June. During the six-month period through August, the coincident index increased 0.6 percent, with three of the four components advancing (diffusion index, six-month span equals 87.5 percent).