Economic Index Suggests Slower Growth Ahead
An indicator of future U.S. economic activity and a survey of mid-Atlantic states’ factory activity Thursday hinted at slower growth ahead.
The index of leading economic indicators rose 0.1% in June to 138.1, below market expectations for a 0.2% rise, the Conference Board, a private industry research group, said in its monthly report.
June’s mild increase follows two straight months of declines, and supports experts’ opinions that the economy will cool further in the second half of 2006.
“The leading economic indicators suggest that the economy could cool even more in the third and fourth quarters of the year,” Ken Goldstein, labor economist at the Conference Board, said in a statement.
The Philadelphia Federal Reserve Bank said its business activity index for the mid-Atlantic region fell to 6.0 in July from 13.1 in June.
That was its lowest since January and well below forecasts of a dip to 12.0.
A reading above zero indicates growth, which according to the survey has been in positive territory since mid-2003.
“Generally, what [the reports] imply is that prices are rising while business expansion is slowing somewhat,” said Michael Sheldon, chief market strategist at Spencer Clarke in New York.
The Philadelphia Fed’s index of prices paid by manufacturers edged up to 50.3 in July from 48.7 in June, while the new orders gauge softened to 10.1 from 17.7.
Nonetheless, the survey’s manufacturing employment barometer jumped to 12.8 in July from 6.8 in June.
In other data, the number of people filing initial claims for U.S. unemployment benefits last week fell 30,000 to the lowest level in a month because of fewer claims from the automobile industry, Labor Department figures showed.
New claims for state unemployment benefits dropped to 304,000 in the week ended July 15, from an upwardly revised 334,000 new applications in the previous week, the Labor Department said.
Two weeks ago jobless claims rose 20,000 as auto plants closed for their annual summer maintenance. A Labor Department analyst said the bulk of last week’s decline was caused by fewer claims filed in the automobile industry.
