Friday, August 22, 2003

Economic signals turn green

July reports put recovery on faster track

By Adam Geller
The Associated Press

NEW YORK - The economic recovery, until now sluggish, is poised to gather speed and strength in coming months, according to a closely watched gauge of the nation's business climate.

The Conference Board reported Thursday that its Index of Leading Economic Indicators rose 0.4 percent in July to 112.5, in line with analysts' expectations. The rise in July's reading followed a revised 0.3 percent increase in June.

The government also released figures showing that first-time claims for unemployment insurance declined last week.

The reports provide further evidence of an economy that is gaining traction, analysts said, foreshadowing a more robust rebound in business activity this fall, albeit one that will do little to ease unemployment in the near term.

"We're seeing some of the best numbers that we've seen in a long time," Parul Jain, deputy chief economist for Nomura Securities, said.

The improvement in the index, after weakness during the first quarter of the year, reflects gradual but sustained growth in business investment that could gather steam later in the year, said Ken Goldstein, an economist for the New York-based Conference Board.

"With export growth still months away, the burden now falls on consumer spending and business investment," Goldstein said. "The bottom line is that the leading economic indicators are more favorable now than any time since the recession started more than two years ago."

The Labor Department reported Thursday that the number of Americans filing new claims for unemployment benefits last week fell to the lowest level in six months.

The government said 386,000 newly laid-off workers filed claims for jobless benefits last week. That was lower than analysts had expected and below the 400,000 figure that many economists say signals a stabilizing labor market. But the Labor Department revised last week's figure upward to 403,000.

Economists said that jobless claims remain high and Conference Board's measure of the current climate shows points to continued weakness in the labor market.

The Conference Board's index measures where the overall U.S. economy is headed in three to six months. It stood at 100 in 1996, its base year.

Five of the 10 components of the leading index rose in July.

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