Indicators Still Pointing Up After Six Months

The government’s chief economic forecasting gauge rose in January for the sixth straight month, led by increasing consumer confidence and a strong showing in manufacturing.

But the increase in the index of leading indicators reported by the Commerce Department on Friday was a moderate 0.3%, suggesting the pace of economic growth is easing from its torrid performance in the last three months of 1993.

“Growth is settling down to a more sustainable pace,” U.S. Chamber of Commerce economist Robert Barr said. “It should relieve some of the recent Wall Street jitters that another bout of inflation tied to strong growth is around the corner.”

Donald Ratajczak, an economist at Georgia State University in Atlanta, said that while the report contained no real surprises, a rise in such components as prices for raw material “says there’s some inflation out there.”

Norman Robertson of Carnegie Mellon University in Pittsburgh said that “given the severity of the weather, I think the economy’s still on a roll.”

The cumulative increase for the index of leading indicators for the last six months was 2.6%, the largest since a 6% rise over seven months in 1983 as the nation emerged from recession during President Ronald Reagan’s first term.

Three straight moves by the index in the same direction are considered a good gauge of where the economy will be moving in the next six to nine months.

The index advanced 0.7% in December and 0.4% in November; the latter figure was revised downward from an earlier 0.5% estimate due to an increase in initial weekly unemployment compensation claims. The overall index was up 1.6% from January, 1993.

The latest rise was slightly higher than the prediction of most economists, who expected the index to go up 0.2%.

Eight of the forward-looking indicators rose in January, two fell and one was unchanged.

Advancing, in order of their impact, from largest to smallest were: consumer expectations; slower business delivery times, a sign of increased orders; the inflation-adjusted backlog of orders at factories for durable goods; raw material prices, suggesting stronger demand; orders for consumer goods; orders and contracts for new business equipment and plants; stock prices, and the money supply.

Depressing the index were an increase in weekly initial claims for unemployment compensation and fewer building permits. The average workweek was unchanged.

The various changes left the index at a seasonally adjusted 100.5, up from 98.9 a year ago.