Economic recovery to be sluggish, survey shows

/ Source: The Associated Press

A private forecast of economic activity over the next six months edged up less than expected in October, signaling slow, bumpy growth next year.

The Conference Board said Thursday that its index of leading economic indicators rose 0.3 percent last month. Economists polled by Thomson Reuters had expected an 0.5 percent gain.

The index climbed 1 percent in September.

"We can expect slow growth through the first half of 2010," Ken Goldstein, economist at the Conference Board, said in a statement. "The pace of growth, however, will depend critically on how much demand picks up, and how soon."

The indicators have risen for seven straight months. The Conference Board said last month that the 5.7 growth rate in the six months through September was the strongest since 1983. That ticked down to 5 percent growth in the six months through October.

The Conference Board forecasts economic activity by aggregating data on current jobless aid claims, stock prices, consumer expectations, building permits for private homes and the money supply, among others.

A measure of consumer expectations, which are dropping as unemployment continues to rise, weighed down the index. The government said unemployment hit 10.2 percent in October, a 26-year high.

If consumers are uneasy, they are likely to curtail their spending, which powers about 70 percent of the U.S. economy.

Building permits, a gauge of future construction, also was a negative factor in the October index. Worries over the expiration of a federal tax credit for homebuyers restrained building last month.

The companion "coincident" index, which measures the current state of the U.S. business cycle, was unchanged in October from September. That measure has been essentially flat since June, according to Conference Board.