Leading Indicators Post Encouraging 0.6% Increase

By John S. McClenahen While economists continue to debate whether the U.S. recovery from recession is already underway, the Conference Board's Index of Leading Economic Indicators definitely signals better times this year. In January the index advanced 0.6%, the fourth consecutive month that it has increased. The index is considered a predictor of what economic conditions will be in about six months. David Huether, chief economist for the National Association of Manufacturers, Washington, D.C., believes the January rise in the index reinforces prospects for economic recovery early this year. "However, the fact that only six of the 10 components of the index were positive points to the fact that the recovery will likely be gradual," says Huether. Last month, the six indicators that increased were vendor performance, consumer expectations, initial jobless insurance claims, building permits, the money supply, and the interest-rate spread. The four negative indicators were manufacturing hours, stock prices, manufacturers' new orders for nondefense capital goods and manufacturers' new orders for consumer goods and materials.

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