The Conference Board(R) The U.K. Business Cycle Indicators(SM)

NEW YORK, March 13 /PRNewswire/ -- The Conference Board announced today that the leading index for the U.K. increased 0.3 percent, and the coincident index remained unchanged in January.

  - The leading index increased again in January with order book volume
    making the largest positive contribution to the gain. The leading index
    grew 1.4 percent from July to January (a 2.7 percent annual rate), about
    the same rate as in early 2006 but below the 5.0 to 5.5 percent annual
    rate growth reached in mid-2006. In addition, the strengths among the
    leading indicators have continued to be somewhat more widespread than
    the weaknesses in recent months.

  - The coincident index remained the same in January. The six month growth
    rate of the coincident index is about 0.7 percent annual rate, only
    slightly below the 1.0 percent annual rate reached in the first half of
    2006.  The strengths among the coincident indicators have been very
    widespread in recent months. At the same time, real GDP growth has been
    fluctuating around a 3.0 percent annual rate in 2006, with a 3.4 percent
    annual rate in the fourth quarter. The recent behavior of the leading
    and coincident indexes so far suggests moderate economic growth is
    likely to continue in the near term.

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

With the 0.3 percent increase in January, the leading index now stands at 139.2 (1990=100). Based on revised data, this index increased 0.1 percent in December and increased 0.1 percent in November. During the six-month span through January, the leading index increased 1.4 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 January. The positive contributors -- from the largest positive contributor to the smallest -- were employment *, real household disposable income*, industrial production. Retail sales declined in January.

The coincident index now stands at 117.4 (1990=100). Based on revised data, this index increased 0.3 percent in December and remained unchanged in November. During the six-month period through January, the coincident index increased 0.4 percent, with all four components advancing (diffusion index, six-month span equals 100.0 percent).

DATA AVAILABILITY:

The data series used by The Conference Board to compute the two composite indexes reported in the tables in this release are those available "as of" 10 A.M. ET on March 9, 2007. Some series are estimated as noted below.

* Series in the leading index that are based on The Conference Board estimates are new orders in engineering industries, productivity of the whole economy, and operating surplus of corporations. Series in the coincident index that are based on The Conference Board estimates are employment and real household disposable income.

THE CYCLICAL INDICATOR APPROACH. The composite indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading and coincident indexes are essentially composite averages of four and nine individual leading or coincident indicators. (See page 3 for details.) They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component -- primarily because they smooth out some of the volatility of individual components.

Historically, the cyclical turning points in the leading index have occurred before those in aggregate economic activity, while the cyclical turning points in the coincident index have occurred at about the same time as those in aggregate economic activity.

     U.K. Composite Indexes:  Components and Standardization Factors

  Leading Index                                     Factor
  1 Order Book Volume                               0.0746
  2 Expected Output Volume                          0.0584
  3 Consumer Confidence                             0.1158
  4 Fixed Interest Price Index                      0.1283
  5 All Share Price Index                           0.0397
  6 New Orders, Engineering Industries              0.0829
  7 Productivity, Whole Economy                     0.3865
  8 Operating Surplus, Corporations                 0.1138

  Coincident Index
  1 Industrial Production                           0.0652
  2 Retail Sales                                    0.0634
  3 Employment                                      0.6984
  4 Real Household Disposable Income                0.1730


  Notes:

The component factors are inversely related to the standard deviation of the month-to-month changes in each component. They are used to equalize the volatility of the contribution from each component and are "normalized" to sum to 1. These factors were revised with the December 15, 2003 release, and all historical values for the two composite indexes were revised at this time to reflect the changes. (Under normal circumstances, updates to the leading and coincident indexes only incorporate revisions to data over the past six months.)

The factors above for the leading index were calculated using 1977-2002 as the sample period for measuring volatility. Separate sets of factors for the 1975-1977 period, the 1974-1975 period, as well as the 1970-1974 period, are available upon request. The factors above for the coincident index were calculated using 1992-2002 as the sample period; separate sets of factors for the 1978-1992 period and the 1970-1978 period are available upon request. These multiple sample periods are the result of different starting dates for the component data. When one or more components are missing, the other factors are adjusted proportionately to ensure that their total continues to sum to 1. For additional information on the standardization factors and the index methodology visit our Web site: http://www.conference-board.org/economics/bci/.

To address the problem of lags in available data, those leading and coincident indicators that are not available at the time of publication are estimated using statistical imputation. An autoregressive model is used to estimate each component. The resulting indexes are constructed using real and estimated data, and will be revised as the data unavailable at the time of publication become available. Such monthly data revisions are now a regular part of the U.S. Business Cycle and Global Indicators program. The main advantage of this procedure is to utilize in the leading index the data such as bond yields, stock prices, and change in consumer confidence that are available sooner than other data on "real" aspects of the economy such as housing starts and new orders. Empirical research by The Conference Board suggests there are real gains in adopting this procedure to make all the indicator series as up-to-date as possible.

                                 NOTICES

     The next release for the "U.K. Leading Economic Indicators" is:

  February 2007 Data                      Wednesday, April 11, 2007
  March 2007 Data                         Monday, May 14, 2007
  April 2007 Data                         Wednesday, June 13, 2007
  May 2007 Data                           Tuesday, July 10, 2007
  June 2007 Data                          Monday, August 13, 2007
  July 2007 Data                          Tuesday, September 11, 2007
  August 2007 Data                        Wednesday, October 10, 2007
  September 2007 Data                     Thursday, November 08, 2007
  October 2007 Data                       Monday, December 10, 2007

           All releases are at 10:30 A.M. (ET), 3:30 P.M. (GMT)

ABOUT THE CONFERENCE BOARD. Founded in 1916, The Conference Board is the premier business membership and research network. It has become a global leader in helping executives build strong professional relationships, expand their business knowledge and find solutions to a wide range of business challenges. The Board's Economics Program, under the direction of Chief Economist Gail Fosler, is a recognized source of forecasts, economy analysis and objective indicators such as the Leading Economic Indicators and the Consumer Confidence Index.

This role is part of a long tradition of research and education that stretches back to the compilation of the first continuous measure of the cost of living in the United States in 1919. In 1995 The Conference Board assumed responsibility for computing the composite indexes from the U.S. Department of Commerce. The Conference Board now produces business cycle indexes for the U.S., Australia, France, German, Korea, Japan, Mexico and the U.K. To subscribe to any of these indexes, please contact Customer Service at 212-339-0345 or email indicators@conference-board.org.

                   AVAILABLE FROM THE CONFERENCE BOARD

  U.K. Business Cycle Indicators
   Internet Subscription                    $  575 per year (1 user)
  (Includes monthly release,
   data, charts and commentary)
  Individual Data Series                    $   30 per series downloaded
  Monthly BCI Report                        $  250 per year
  (Sample available on request)
  Monthly News Release (fax or email)       $   59 per year
  BCI Handbook (published 2001)             $   20
  Corporate Site License        contact Indicators Program at (212) 339-0330

Business Cycle Indicators for France, Germany, Japan, Korea, Mexico, Spain and the U.S. are available at $575 per country per year (1 user). Discounts are available to Associates of The Conference Board and accredited academic institutions.

The next release is scheduled for April 11, 2007 at 10:30 A.M. ET

In the U.K. - April 11, 2007 at 3:30 P.M. (GMT)