Indicators Up 0.4% in May
The U.S. index of leading economic indicators rose twice as much as expected during May, and the trade deficit swelled to a record in April as imports rose to meet expected consumer demand, government reports showed Thursday.
The Conference Board’s measure of likely economic conditions in three to six months rose 0.4% after a 0.3% decline in April.
“It’s not a question anymore of whether the economy is in recovery but how strong it’s going to be,” said Greg Mount, an economist at Bank One Corp. in Chicago.
Five of the 10 indicators the New York-based Conference Board uses to calculate the monthly index pushed it higher and four were negative.
Growth was suggested by measures of money supply, jobless claims, building permits, consumer expectations and vendor ability to keep up with orders.
A drop in stock prices, fewer orders for consumer goods and non-defense capital goods and a narrower spread between the yield on 10-year Treasury notes and the Fed’s benchmark overnight rate limited the increase.
The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1% in May after being unchanged in April. The index of lagging indicators fell 0.2% last month, after a 0.5% drop a month earlier.
The $35.9-billion imbalance between imports and exports of goods and services followed a $32.5-billion trade gap in March, the Commerce Department said. The current account deficit, a wider measure that includes investments, grew to a record $112.5 billion in the first three months of the year.
The trade deficit reflected higher oil prices as well as consumer demand.
The U.S. imported 303 million barrels in April, compared with 267 million a month earlier. The price per barrel rose to $22.48 from $19.18.
Imports of consumer goods rose 5.4% to a record $24.9 billion because of increased demand for automobiles, clothing, televisions and toys.
Exports rose 2.2% to $80.1 billion, led by shipments of chemicals, industrial machinery and semiconductors.
The gap in the current account balance grew from a revised $95.1 billion in the fourth quarter of 2001, the Commerce Department said.
It was the second consecutive increase.
The growing imbalance in current accounts has raised worries among government officials and economists that foreign investors may pull money out of the U.S. The dollar fell to a two-year low against the euro after the trade reports.
A separate report Thursday showed job losses may be slowing as the economy picks up. Initial applications for state unemployment benefits fell by 2,000 last week to 393,000, the Labor Department said.
