The index of U.S. leading economic indicators rose in September by the most in seven months, boosted in part by a jump in permits for home construction that's helping underpin the expansion.
The Conference Board's gauge of the outlook for the next three to six months increased 0.6 percent after a revised 0.4 percent drop in August that was bigger than initially reported, the Manhattan-based group said Thursday.
Economists projected the gauge would climb 0.2 percent, according to the median estimate in a Bloomberg survey.
A recovery in the housing market and a surge in stock prices may also be fueling optimism among consumers, whose spending accounts for about 70 percent of the economy. At the same time, the so-called fiscal cliff -- $607 billion in federal spending cuts and tax increases scheduled to take effect in January unless Congress acts -- is a hurdle for business investment and hiring.
"The residential housing market is in the very early stages of a durable recovery," Joe Lavorgna, chief U.S. economist at Deutsche Bank Securities Inc. in Manhattan, said in a research note before the report. "Housing is a leading indicator of underlying domestic demand; thus, continued improvement in the former bodes well for some acceleration over time in the latter."
Estimates from 52 economists in the Bloomberg survey ranged from a decrease of 0.1 percent to an increase of 0.6 percent in the Conference Board's leading index. The August figure was revised from a previously reported 0.1 percent drop, reflecting weaker orders from consumer goods and capital equipment during the month.
Consumer confidence reached a six-month high last week as more Americans said it was a good time to shop, another report Thursday showed. The Bloomberg Consumer Comfort Index rose to minus 34.8 in the week ended Oct. 14, the highest level since April, from minus 38.5 the previous week. The monthly expectations gauge improved to minus 7 in October, the best reading since May.
More Americans than forecast filed applications for unemployment benefits last week, reflecting an unwinding of adjustments for seasonal swings at the start of a quarter, Labor Department figures showed Thursday. Jobless claims increased by 46,000 to 388,000 in the week ended Oct. 13 from a revised 342,000 the prior period that was the lowest since February 2008.
Six of the 10 indicators in the leading index contributed to the increase, while three declined. The interest-rate spread between the federal funds rate and 10-year Treasury notes, a gauge of credit and pickups in orders for consumer and capital goods were among other indicators adding to the September LEI gain.
"The LEI has been signaling an economy that is fluctuating around a slow growth trend," Ataman Ozyildirim, an economist at the Conference Board, said in a statement. "The six-month growth rate has slowed substantially, but still remains in growth territory due to positive contributions from housing and financial components."