Economy may grow modestly, group says


Published: Wednesday, January 24, 2007 at 6:01 a.m.
Last Modified: Wednesday, January 24, 2007 at 12:00 a.m.

NEW YORK — A gauge of future economic activity rose slightly in December as two of the economy's soft spots — the housing and job markets — showed signs of improvement, according to an industry-backed research group.

The New York-based Conference Board said its Index of Leading Economic Indicators edged up 0.3 percent last month, suggesting the economy may grow at a modest clip in the next several months. Last month's increase follows a revised flat reading in November and a slight decline in October.

Ken Goldstein, economist with the Conference Board, said the housing and job markets showed signs of leveling in December, while manufacturers appeared to grow less cautious about inventory.

"When you start to put all the ducks in a row, it certainly doesn't add up to an economy that is going to come roaring right back," he said. "But it's clearly not an economy that is continuing to slow."

Analysts had expected the leading index to rise 0.4 percent in December. The index now stands at 138; the gauge 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 an improving job market.

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.

Vitner said he believes December's pickup "will come at the expense of growth in the early part of the year."

"We're still looking for economic growth to moderate over the course of the year," he said.

"It certainly doesn't add up to an economy that is going to come roaring right back. But it's clearly not an economy that is continuing to slow."

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