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

The leading index increased slightly in May, following strong gains in previous months. The six-month growth rate of the leading index picked up to a 2.1 percent rate (a 4.2 percent annual rate), from the 1.0 - 1.5 percent rate (about a 2.5 percent annual rate) at the end of 2006. In addition, only the yield spread component has been making consistently small negative contributions to the leading index recently, and the strengths among the leading indicators have become more widespread than the weaknesses in recent months.

The coincident index also increased slightly in May, the third consecutive gain. This index of current economic activity has been on a flat to moderately rising trend since mid-2006, but its growth has picked up since January, and the strengths among the coincident indicators have become somewhat more widespread in the last three months.

After reaching almost a 4.5 percent annual rate in mid-2006, the six-month growth rate of the leading index gradually slowed through January, but it has since rebounded and the index is again growing at about the same rate as in mid-2006. At the same time, real GDP growth has been fluctuating in the range of 2.5-3.5 percent annual rate in the last six quarters, including 2.6 percent in the first quarter of 2007. The recent behavior in the leading and coincident indexes suggests that the economy should continue growing and may even pick up somewhat in the near term.

LEADING INDICATORS. Five of the seven components that make up the leading index increased in May. The positive contributors — from the largest positive contributor to the smallest — were consumer confidence, productivity for the whole economy, stock prices, order book volume, and operating surplus of corporations*. The negative contributors — from the larger contributor to the smaller — were volume of expected output and yield spread.

With the 0.1 percent increase in May, the leading index now stands at 129.1 (1990=100). Based on revised data, this index increased 0.5 percent in April and increased 0.4 percent in March. During the six-month span through May, the leading index increased 2.1 percent, with all seven components advancing (diffusion index, six-month span equals 100.0 percent).

COINCIDENT INDICATORS. All of the four components that make up the coincident index increased in May. The positive contributors — from the largest positive contributor to the smallest — were employment, industrial production, retail sales, and real household disposable income.

With the increase of 0.2 percent in May, the coincident index now stands at 118.2 (1990=100). Based on revised data, this index increased 0.1 percent in both April and March. During the six-month period through May, the coincident index increased 0.2 percent, with three of the four components advancing (diffusion index, six-month span equals 75.0 percent).