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Economy shows signs picking up Original Source Link: (May no longer be active)
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Economy shows signs of picking up
By Adam Geller
The Associated Press
NEW YORK — The economic recovery, until now sluggish, is poised to gather speed and strength in coming months, according to a closely watched gauge of the nation's business climate.
The Conference Board reported yesterday that its Index of Leading Economic Indicators rose 0.4 percent in July to 112.5, in line with analysts' expectations. The rise in July's reading followed a revised 0.3 percent increase in June. The report coincided with the government's release of figures showing that first-time claims for unemployment insurance declined last week.
The reports provide further evidence of an economy that is gaining traction, analysts said, foreshadowing a more robust rebound in business activity this fall, albeit one that will do little to ease unemployment in the near term.
"We're seeing some of the best numbers that we've seen in a long time," said Parul Jain, deputy chief economist for Nomura Securities. "That reinforces our belief that economic growth should pick up in the months ahead."
The improvement in the index, after weakness during the first quarter of the year, reflects gradual but sustained growth in business investment that could gather steam later in the year, said Ken Goldstein, an economist for the New York-based Conference Board.
"With export growth still months away, the burden now falls on consumer spending and business investment," Goldstein said. "The bottom line is that the leading economic indicators are more favorable now than any time since the recession started more than two years ago."
The Conference Board's reading on the economy was echoed by the Labor Department's report yesterday that the number of Americans filing new claims for unemployment benefits last week fell to the lowest level in six months.
The government said that 386,000 newly laid-off workers filed claims for jobless benefits last week.
That was lower than analysts had expected, and below the 400,000 figure that many economists say signals a stabilizing labor market. But the Labor Department revised last week's figure upward to 403,000.
Economists said that even with the decline in the newest figure, jobless claims remain high and the Conference Board's measure of the current climate shows continued weakness in the labor market.
"We are recovering but we're still not seeing enough growth to put a dent in the unemployment rate and give us a really significant improvement in labor-market conditions," said Anthony Chan, chief economist with Banc One Investment Advisors. "Until we see that we're not going to see the consumer getting excited about the future and perhaps pushing us to the next level."
The Conference Board's index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.
Five of the 10 components of the leading index rose in July, led by improvements in the interest-rate spread, the real money supply, and average new claims for unemployment insurance.
The coincident index, which measures current economic conditions, increased 0.1 percent in July, the group reported. It was bolstered by increases in variables, including personal income and industrial production, but offset by continuing declines in employment. The lagging index also rose 0.1 percent.
Stocks ended the day higher on the New York Stock Exchange, following release of the reports.
Copyright © 2003 The Seattle Times Company
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