Towards a composite cyclical leading indicator for private construction new orders

This paper undertakes through experimental analysis to identify leading indicators for UK commercial and industrial construction new orders. A leading indictor is best thought of as a variable whose cyclical pattern over time tends to precede the cyclical pattern of another variable by a reasonably constant time interval. The most suitable leading indictors are then used to form a composite indictor for construction new orders. The research involves examining a large number of macro - economic time series that, based on intuitive reasoning and published literature that would seem to follow a reasonably constant cyclical relationship with the 'reference' series. After testing for the strength and timing of the relationship between the indicators and the reference series a composite index for construction new orders is presented and its examined for its ability to chart turning points in the reference series.