Experts see signs of growth
Published: Friday, January 21, 2005 at 6:01 a.m.
Last Modified: Thursday, January 20, 2005 at 10:56 p.m.
NEW YORK - A closely watched measure of future economic activity rose for a second consecutive month in December, pointing to sustained, gradual growth.
The Conference Board, a private research group, said Thursday that its Index of Leading Economic Indicators rose 0.2 percent last month, following a revised gain of 0.3 percent in November. The increase, which was in line with economists' forecasts, pushed the index to 115.4, still below its high of 116.5 in May.
The gains in the index followed five months of declines. The index is intended to predict economic activity over the coming three to six months.
''There had been some concern earlier in the year after five month-over-month declines that there could be signs of significant weakening economically moving forward,'' said Jason Schenker, an economist with Wachovia Corp. ''But now, after two month-over-month increases, we continue to find justification for our own forecasts of growth going forward.''
Four of the ten indicators that make up the index rose in December, including the index of consumer expectations, stock prices, real money supply and average weekly first-time claims for unemployment benefits. The declining indicators included vendor performance, interest rate spread, manufacturers' new orders for nondefense capital goods, building permits, and new orders for consumer goods and materials. Average weekly manufacturing hours were unchanged.
''This reflects a positive shift in the balance of forces - a more positive picture in the last two months than in the prior five months,'' said Ken Goldstein, an economist for the New York-based Conference Board. ''Although retail sales were modest in December, investment in equipment and homebuilding remain strong segments of the economy.''
An accompanying coincident index, which measures current economic activity, increased by 0.3 percent in December, following a 0.2 percent gain in November.
The lagging index, which looks back at the economy in past months, was unchanged in December, after a decline of 0.3 percent in November.
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