Consumer Confidence, Growth Rate Falls
A widely watched gauge of future economic activity fell in October for the fifth consecutive month as consumer expectations dimmed and the growth rate slowed, a business group said today.
However, many analysts said that the nation’s economic prospects are stronger than the Conference Board’s index of U.S. leading economic indicators would suggest. Wall Street also did not seem too worried about the report, with stocks mixed in early afternoon trading.
The index of U.S. leading economic indicators slipped 0.3% in October from the previous month to 115.1 as “weakness in recent months has become more widespread,” the Conference Board, a business consulting firm, said in a statement.
Seven of the 10 components of the index declined in October, with a drop in consumer expectations serving as the major drag on the index. The index would have dropped further if it had not been for improvements in weekly jobless claims, an increase in orders for manufactured goods and a rise in stock prices.
“While the leading index is not yet signaling a downturn in the economy, the growth rate of the leading index has slowed below its long-term trend growth rate,” the Conference Board said.
Many economists said that the economic outlook is probably stronger than the leading index might indicate.
Some of the factors, such as falling stock prices and deteriorating consumer sentiment, that have undermined the index in recent months have shown signs of bottoming out and have staged recent turnarounds. Ian Shepherdson, chief U.S. economist for High Frequency Economists, said the leading index is projected to post an increase this month.
“In short, the [leading index] is too gloomy — but it is a reminder that there are risks,” Shepherdson said in a research note.
In other economic news today, the Labor Department said that new jobless claims for the week that ended Nov. 13 fell by 3,000 from the previous week to a seasonally adjusted 334,000 unemployment claims. The four-week moving average, a more stable figure, rose by 1,000 claims to 338,250 claims.
