Index of leading indicators rises again
An index of leading U.S. economic indicators rose for a second month in October, pointing to a gradual strengthening of the expansion early next year.
The Conference Board’s measure increased 0.2% after a revised 0.4% September gain that was bigger than initially reported, the New York-based group said Monday. The index points to the direction of the economy over the next three to six months.
The rise last month reflected higher stock prices and a more confident consumer, giving a boost to an economy hamstrung by the slumping housing market. The report reinforces Federal Reserve forecasts of “moderate” growth as cheaper fuel spurs spending and reduces company costs.
“This is an encouraging sign that we may be headed out of the slowdown in coming months,” said Jonathan Basile, an economist at Credit Suisse Holdings in New York. “It’s not flashing green or all systems go, but it does suggest that by early next year we should see decent growth.”
The index matched the median of 52 economists’ projections in a Bloomberg News survey, after an originally reported September increase of 0.1%. October estimates ranged from no change to a gain of 0.5%.
Six of 10 indicators had a positive effect on the index last month.
Consumers’ improving outlook on the economy, as measured by the University of Michigan, added 0.19 of a percentage point to the leading index. The consumer expectations gauge jumped to a 15-month high in October. It stayed close to the level this month, according to a preliminary report.
Rising stock prices added 0.13 of a point to the leading index. The S&P; 500 index averaged 1363.4 last month, up 3.5% from the prior month.
Initial jobless claims added 0.03 of a percentage point to the index. Claims slipped to an average of 311,400 last month from September’s 313,900. The unemployment rate fell to a five-year low of 4.4% in October.
An increase in the factory workweek added 0.06 of a percentage point to the index. The Labor Department said Nov. 3 that the manufacturing workweek rose to 41.2 hours from 41.1 in September.
Building permits, which signal future construction, subtracted 0.17 of a percentage point from the index. Permits dropped in October to an annual pace of 1.535 million, the lowest since December 1997, the Commerce Department said last week.
Among other indicators, vendor performance subtracted 0.27 of a percentage point. The Institute for Supply Management’s index of factory supplier deliveries, a measure of how long it takes companies to receive goods, fell to 50.2 last month from 54.1 in September.
