Indicators Post First Increase in 6 Months

From Associated Press

The government’s index of leading indicators rose a slight 0.1% in December, the first increase in six months. One analyst said it was “a faint ray of light” that the recession could end by midyear.

Many economists agreed that the Commerce Department’s chief economic barometer, released Wednesday, suggested that the contraction will not deepen, though they cautioned that it was no harbinger of sudden recovery.

“It indicates only that we’re through the worst of the downturn,” said economist Allen Sinai of Boston Co. “It does not tell us the bottom is in sight,” although “it is a faint ray of light in terms of second-half recovery.”

In addition to higher stock prices, five measures were positive in December, pushing the index up, including a longer workweek, more plant and equipment orders, improved consumer expectations, fewer jobless insurance claims and bigger order backlogs.


Other positive contributors were an improvement in an index measuring consumer confidence, a decline in initial unemployment claims and an increase in unfilled orders at factories.

Negative contributors were fewer factory orders for consumer goods, a decline in building permits, faster business delivery times, a drop in prices of raw materials and a decline in the money supply.

Economist Robert G. Dederick of Northern Trust Co. in Chicago said the report “should not be taken as an argument that the economy is in the process of bottoming out” but “it is further support for the mild recession scenario.”

Government economists, both in the Administration and on Capitol Hill, have said the recession will be shorter and milder than the average downturn since World War II, ending sometime during the second or third quarter.


LEADING INDICATORS Seasonlly adjusted index, 1982 equals 100 Dec., ’90: 140.1 Nov., ’90: 140.0 Dec., ’89: 145.3 Source: Commerce Department