Index of Leading Indicators Surges 0.7% in November
A U.S. leading indicators gauge issued Thursday posted a solid November gain, adding to signs of economic recovery though not at a pace fast enough to generate new jobs.
The New York-based Conference Board said its index of leading indicators, designed to predict economic performance three to six months ahead, jumped 0.7% in November.
That was its biggest gain since a 1.1% jump in December 2001, helped by higher stock prices and stronger consumer confidence. Revised figures showed that in October it barely edged up by 0.1%, rather than being flat.
Analysts said the surprising surge in leading indicators was encouraging, especially in the face of new data from the Labor Department Thursday showing new weekly claims for jobless pay still at a lofty level.
The department said first-time jobless claims during the week ended Dec. 14 totaled 433,000. While that was down 11,000 from the prior week, it handily topped Wall Street economists’ forecasts for 408,000 claims and remained above the 400,000 level that economists say signals stalled job prospects.
The data fit a general pattern of sluggish expansion currently but with reason to hope for a modest revival by the middle of next year.
Last week, the closely watched Blue Chip economic forecasting survey said its members anticipated a gradual pickup in activity during 2003 to an annual growth rate around 3.7% by year-end. But the Blue Chip forecast was for anemic 1.4% growth in the fourth quarter this year.
Jerry Jasinowski, president of the National Assn. of Manufacturers, described the leading indicators report as “bittersweet.” Although consumer optimism strengthened, new orders for capital goods fell last month, which implies a recovery in the manufacturing sector will be delayed amid a generally lackluster economy, he said.
“Overall, today’s report suggests that while the economic expansion will remain on track, it will continue its anemic pace in the near term,” Jasinowski said.
The November leading indicators report was taken as a sign of creeping progress, at a minimum reinforcing hope that the economy will avoid slipping back into a recession like the mild one that lasted through the first nine months of 2001.
“The rebound in the index is a clear sign that we are basically in no more than a soft patch. The economy is not headed anywhere down the path of anything resembling a double dip,” Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio, said.
The Conference Board’s chief economist, Ken Goldstein, suggested that a few more positive factors were kicking in to give the expansion a late-year lift.
“Only consumption consistently fueled the recovery throughout 2002. Meanwhile, the financial market slump seems to be lifting a little this autumn,” he said, noting that there were no signs that consumers were retrenching. “Recent consumer buying figures have somewhat allayed fears about a weak holiday season and consumer attitudes have also improved.”
A separate report from the Federal Reserve Bank of Chicago offered a mixed signal -- its national activity index remained in negative territory for a fourth month in November, but was not in as steep a decline as it was during October. The Chicago Fed said the index, a three-month moving average of a basket of indicators, was hit by a rise in the national unemployment rate to 6% last month.
Job weakness may persist for some time, even if the economy rebounds modestly as predicted.
The Labor Department report on jobless claims showed the four-week moving average of claims rose by 12,750 to 400,750 last week.
“It’s still a very soft labor market,” said David Wyss, Standard & Poor’s chief economist. “I think flat is probably a better description than deteriorating, but it certainly is in line with what we’ve seen in the [monthly] employment report where payrolls have been flat for the whole year.”
