A widely watched gauge of economic activity increased slightly in June, suggesting continued economic growth, though at a slow to moderate rate for the time being, a research group said on Thursday.
The Conference Board, an industry-backed research group based in New York, said its Index of Leading Economic Indicators rose 0.1 percent to 138.1 in June after it declined 0.6 percent in May and 0.1 percent in April. The index is watched closely because it’s designed to predict economic activity three to six months in the future.
The June figure was in line with what analysts had expected.
“It doesn’t tell us that the economy is in trouble or roaring ahead,” said David Resler, chief economist at Nomura Securities in New York.
“It is exactly the kind of picture you’d expect from an economy moving into a period of moderate economic growth. We will see conflicting signs,” he added.
Six out of the ten indicators that comprise the leading index rose in June — the biggest positive contributor was a decline in average weekly initial claims for unemployment insurance, followed by the index of consumer expectations, real money supply, average weekly manufacturing hours, interest rate spread and manufacturers’ new orders for new nondefense capital goods.
Four indicators declined in June — vendor performance, building permits and stock prices. Holding steady were manufacturers’ new orders for consumer goods and materials.
Resler said the most encouraging sign in the June data was continued improvement in the average workweek. “That’s an indication that the labor market remains healthy and seems to be helping consumer confidence,” he said.
Declining building permits and stock prices “suggest we’re not going to get a boost in spending from housing and stock market wealth, which is exactly what Fed Chairman Ben Bernanke told us yesterday.”
Also on Thursday, the Labor Department reported a sharp decline in the number of Americans filing new claims for unemployment benefits, reflecting fewer layoffs in the auto industry. The agency said 304,000 newly laid off workers filed applications for benefits, a drop of 30,000 from the previous week, when claims had surged by 20,000.
The Conference Board’s index of coincident indicators, which measure current economic activity, rose 0.2 percent in June to 122.9, while its index of lagging indicators, which measure past performance, increased by 0.6 percent to 123.7.