New Economic Data Encourage Optimism

By John S. McClenahen An index that previews future performance and a drop in initial unemployment insurance claims are giving new credence to the folks who see the U.S. economic glass as half full rather than half empty. After two consecutive months of 0.2% declines, the Index of Leading Indicators compiled by the Conference Board advanced 0.1% in April. Last month's rise is only the second so far this year -- indeed, only the second rise in the economic index during the last seven months. Interest-rate spread, the money supply, and stock prices pushed the index of leading indicators far enough into positive territory to offset the drag created in the 10-element index by initial jobless claims, vendor performance, building permits, consumer expectations, and manufacturers' new orders for non-defense capital goods and materials. Unchanged in April were average weekly manufacturing hours and manufacturers' new orders for consumer goods. "Continued but modest growth in services and some limited recovery in manufacturing are likely to deliver positive but limited job, income, and gross domestic product growth over the next few months -- barring any sudden economic shock," says Ken Goldstein, economist at the Conference Board, a New York-based business research group. Separately, jobless claims for the week ending May 12 fell 8,000 to 380,000, reports the U.S. Labor Dept.'s Employment & Training Administration. "This was the second consecutive weekly decline and indicates that payrolls are not likely to post another sizable decline for May," says Karen Dexter, an economist at Merrill Lynch & Co., New York.

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