Leading Indicators Increase in August

The nation’s long-stagnant economy again showed signs of recovery in August, though the job market continued to be a damper, according to a closely watched gauge of future business activity.

The Conference Board reported Thursday that its index of leading economic indicators rose 0.4% in August to 113.3, in line with analysts’ expectations. The rise in August followed a revised 0.6% increase in July.

But the improved economic outlook was tempered by stagnation in the board’s reading of the current business climate, weighed down by continued weakness in the job market.

Analysts said the report points to an economic recovery that continues to strengthen, albeit one where the lack of job creation is a problem.

“Everything is showing us growth except for employment and it’s the one area where we’re having a little trouble seeing recovery,” said Gina Martin, an economist with Wachovia Corp. in Charlotte, N.C.

Even with that drag, the Conference Board’s reading is a sign of a business environment that should improve in coming months, economists said.

“The economy is improving, although the road will remain bumpy,” board economist Ken Goldstein said. “With export growth still months away, the growth burden remains on consumer spending and business investment.”

The leading index seeks to determine where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Four of the 10 components of the leading index rose in August, including improvements in the interest rate spread, vendor performance, real money supply and building permits.

The coincident index, which measures current economic conditions, was flat in August, although three of its four indicators increased. The lagging index also was unchanged.

Meanwhile, the latest snapshot of the labor market was slightly better than economists had been expecting. The Labor Department reported Thursday that the number of Americans filing new claims for unemployment benefits declined last week after rising in the three previous weeks.

The government said that for the work week ended Saturday, new claims for unemployment benefits fell by a seasonally adjusted 29,000 to 399,000.

Last week’s level of claims not only was the lowest since the week ended Aug. 23 but also marked the first time since then that claims dipped below 400,000.

Analysts were forecasting claims to fall no lower than 410,000 in the latest week.