An important gauge of future economic activity rose a solid 0.3 percent in November, suggesting that the economic recovery will gain momentum next year.
The Conference Board reported Thursday that its Composite Index of Leading Economic Indicators advanced to 114.2 last month following a revised increase of 0.5 percent in October to 113.9. The index had shown no change in September.
November's 0.3 percent increase was in line with analysts' expectations.
In Washington, the Labor Department said that new claims for unemployment benefits fell sharply last week. It said that for the work week ending Dec. 13, new applications for benefits declined by a seasonally adjusted 22,000 to 353,000, the lowest level since Nov. 1. The drop was much larger than economists were expecting.
The reports helped boost share prices on Wall Street. In midmorning, the Dow Jones industrial average was up 39.34 at 10,184.60, while the Nasdaq composite index gained 19.78, or more than 1 percent, to 1,941.11.
The index of leading indicators is closely watched because it forecasts movements in the economy in the next three to six months.
The U.S. economy was slow to pick up following the recession in 2001. But many analysts now believe the recovery is deepening and widening and say growth next year could exceed 4 percent.
Gary R. Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, Mo., said the second consecutive increase in the gauge "suggests the economy is poised to do well going into next year."
Thayer said the economy would be spurred by continuing low interest rates, the Bush administration tax cuts and the weak dollar, which makes U.S. exports more competitive.
"And the United States is not alone," he noted. "The other major economies appear to be strengthening at the same time."
Thayer expects the U.S. economy to show growth of 4.6 percent in 2004.
The Conference Board's economist, Ken Goldstein, said in a statement accompanying the report that the figures "are pointing to post-holiday strength."
He added: "The lone note of caution is that although the path is up, it has been bumpy and will remain so in the new year."
The New York-based business group said six of the 10 indicators in the index contributed to November's advance. They included improvement in claims for unemployment, consumer sentiment, vendor performance, average weekly manufacturing hours, stock prices and the spread in interest rates.
The decliners were building permits, the money supply, new orders for capital goods, and new orders for consumer goods and materials.
The Index of Coincident Indicators, which gauges current economic activity, increased 0.2 percent in November to 116.3 following a revised rise of 0.3 percent in October to 116.1.
The Index of Lagging Indicators dropped 0.3 percent to 97.0 in November following a decline of 0.1 percent in October to 97.3. October's performance initially was estimated as a 0.2 percent increase.