Stock Price Rise Fuels Economic Index Gain

The government’s index of leading economic indicators took its cue from Wall Street today, gaining 0.4% in March primarily because of the rise in stock prices, the Commerce Department reported.

The 4.1% rise in the value of 500 common stocks during March constituted about a third of the index’s 0.4% growth, the department’s Bureau of Economic Analysis said.

The index, which helps forecast the economy’s shape in the next few months, also increased thanks to a drop in new unemployment claims, a slowdown in the ability of vendors to deliver goods and a rise in new orders for plants and equipment.

Manufactured Goods

Lesser help came from a rise in new orders for manufactured consumer goods and the lack of change in the number of building permits issued.

Those pluses more than overcame a drop in the average workweek for production workers in March, a fall in sensitive materials prices and a slight shrinking of the nation’s money supply.

Commerce Department Undersecretary Robert Ortner applauded the increase, saying that even without the rise in stock prices, the annual rate of increase “was still a healthy 6.2% and is consistent with 3% or more overall economic growth during 1987.”

Home Sales Drop

The government’s cheer was tempered later today, however, with the report that new single-family home sales dropped 3.6% in March to a seasonally adjusted annual sales rate of 699,000 homes. February’s rate was 725,000.

The median sales price--the point at which half of all homes cost more and the other half less--was $101,500, while the average sales price was $122,400, the government said.

Today’s report on the index of leading indicators means the index has risen 13 of the last 16 months and has grown 4.4% since October.

White House spokesman Marlin Fitzwater called today’s figures “good news.”

“The March figures indicate continued economic growth and portend economic health for the next few months,” Fitzwater said.