Economy Still Growing, but Slowly : Forecasts: Leading indicators index posts a 0.2% gain in June.
The U.S. economy was still expanding last month “at a solid pace,” but there were scattered signs of slower growth and little evidence of rising retail prices, according to a nationwide Federal Reserve Board survey of economic conditions released Wednesday.
The California economy , which accounts for about one-eighth of the U.S. total, was described as “sluggish.”
Three other reports out Wednesday, one from auto makers and the others from the Commerce Department, also support the notion of slower economic growth. Commerce said its index of leading indicators, whose changes often foreshadow those of the overall economy, rose 0.2% in June, following a 0.1% rise in May and no change in April. The 0.3% increase over three months is significantly lower than the 1% gain from December to March and the 1.6% from September to December.
“The June data are indicative of an economy that is growing at a reasonable but not steamy pace,” said Ray Stone of Stone & McCarthy, a financial markets research firm in Princeton, N.J.
The Fed survey results, part of the information Fed policy-makers will use at their Aug. 16 policy-making session, leaves open the question of whether the central bank will raise short-term interest rates for a fifth time this year.
Most Fed districts reported that manufacturers and builders are paying more for components and materials. At the same time, however, the survey summary notes that “a majority of districts report that retailers are holding the line on price increases.”
The sector seeing the biggest slowdown is housing, which has suffered in most of the country because of rising mortgage interest rates, the survey found. In the other reports, auto makers said that sales of domestically produced new cars fell last month to an annual rate of 6.4 million units from 7 million in June and that sales of light trucks--a category that includes minivans and sport utility vehicles--dipped to a 5.2-million-unit rate from 5.4 million.
The Commerce Department also reported that new orders for manufactured goods rose 0.8% in June to $279.6 billion. Orders rose 0.8% in May as well.
Although the rising number of orders underscores the current health of the manufacturing sector, orders are not coming in as fast as they were late last year and early this year.
Index of Leading Indicators
Seasonally adjusted index; 1987 = 100
June 1994: 101.5
Source: Commerce Department
Factory Orders
Total new orders, in billions of dollars, seasonally adjusted:
June 1994: 280.0
Source: Commerce Department
