Leading indicators jump 1.1 percent in December
(AP) — A forecast of future economic activity jumped 1.1 percent in December, a private research group said Thursday, suggesting that growth could pick up this spring.
The increase in the Conference Board's index of leading economic indicators was larger than the 0.7 percent rise that economists surveyed by Thomson Reuters had expected.
The gauge had risen a revised 1 percent in November — it was initially reported as a 0.7 percent increase — and has been up for nine consecutive months.
"The economic recovery still has momentum," said Tim Quinlan, an analyst with Wells Fargo. He said the economy may add jobs this year.
Some analysts have been worrying that growth in the economy will stagnate this year as government support programs wind down and unemployment remains high.
Economists expect the country's gross domestic product to have grown 4.4 percent in the last three months of 2009 as businesses restocked inventories, up from an annual rate of 2.2 percent growth in the previous quarter.
The leading indicators index is designed to forecast economic activity in the next three to six months. The December reading is a hint of what conditions will be in late spring and early summer.
The index has risen 5.2 percent in the six months through December, a significant pickup from early 2009 but slower than the 5.7 percent growth rate in the six months through September.
"The dramatic improvement in this indicator, particularly in the last quarter of 2009, underscores the recent pick-up in momentum in U.S. economic activity," said TD Securities analyst Millan Mulraine in a note to investors.
Eight of the 10 components in the index showed improvement in December, with the strongest gains in the so-called interest rate spread and building permits, which are a signal of future home construction.
The interest rate spread is the difference between the cost of borrowing money for 10 years and borrowing overnight.
A wide gap between those costs can signal that investors expect inflation to increase or that they expect economic activity to pick up.
The Conference Board's coincident index, which measures the current state of the business cycle, rose 0.1 percent in December for the third month in a row.
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