Index of Leading Economic Indicators Rises 0.3 Percent in December
NEW YORK (AP) — An indicator of future economic activity rose slightly in December, suggesting the economy may grow at a modest clip in the next few months, an industry-backed research group said Tuesday.
The New York-based Conference Board said Tuesday its Index of Leading Economic Indicators edged up 0.3 percent last month, following a revised flat reading in November and a slight decline in October.
Market analysts expected the index to rise 0.4 percent.
The index stood at 138 versus 138.2 in November. The index is closely watched because it is designed to forecast economic activity over the next three to six months.
Six of the 10 indicators that make up the index rose in December, led by robust numbers of building permits and lower average weekly jobless claims.
Abnormally warm weather last month in the Midwest and Northeast resulted in a jump in construction activity in those regions, where building activity usually slows in December. That swell of activity may have inflated December’s index, said Mark Vitner, senior economist with Wachovia Corp.
"We’re still looking for economic growth to moderate over course of the year," he said.
Other positive contributors to the December index included real money supply, stock prices, vendor performance and manufacturers’ new orders, excluding defense contracts. Interest rates and consumer expectations continued to be a drag on the index. Average weekly manufacturing hours and manufacturers’ new orders for consumer goods were flat during the month.
The leading index edged up 0.1 percent over the six months through December and has increased two of the past four months.
"I think it points to the idea that there is a bit of gain in momentum in the economy," said Stuart Hoffman, chief economist with Pittsburgh-based PNC Financial Services Group. "Two pretty good jumps in last four months — that doesn’t signal a downturn in the economy."