U.S. Economy Again Sends Mixed Signals

By John S. McClenahen The outlook for the U.S. economy improved dramatically in November, according to one closely watched set of data. The Index of Leading Indicators compiled by the New York-based Conference Board, a business-research group, advanced 0.7% last month, its biggest gain since December 2001. The leading index now stands at 112.3 (1996=100). Five of the 10 indicators that make up the index increased in November. They were stock prices, the money supply (adjusted for inflation), the interest rate spread, initial claims for unemployment insurance, and consumer expectations. Manufacturing was still having trouble getting growth traction, however. New orders for nondefense capital goods and new orders for consumer goods and materials were both negative in November. For last week, initial claims for unemployment insurance dropped to 433,000, some 11,000 fewer than during the week ending Dec. 7. However, the four-week moving average for initial claims increased last week to 400,750, a gain of 12,750 from the previous week. "During the past year, jobless claims [have remained] locked in a range of between 380,000 and 430,000 for all but a few weeks," observes Stan Shipley, a senior economist at Merrill Lynch & Co., New York. Jobless claims around 400,000 are consistent with no job growth, he explains. So, not surprisingly, Shipley concludes, "The job market shows no sign of an imminent upturn."

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