By John S. McClenahen For the third consecutive month, a closely watched index that previews future U.S. economic activity increased in December 2002. The index of leading economic indicators rose 0.1% last month, suggesting a stronger economic recovery during the first six months of 2003, reports the Conference Board, a New York-based business research group. The leading index now stands at 111.3 (1996=100). Eight of the 10 measures that constitute the index of leading indicators rose in December. They were: building permits, average weekly manufacturing hours, consumer expectations, real money supply, vendor performance, the interest rate spread, manufacturers' new orders for nondefense capital goods, and manufacturers' new orders for consumer goods and materials. Only initial weekly claims for unemployment insurance and stock prices were index dampers. The Conference Board report "offers a needed dose of good news that the economy is likely to get back on a modest recovery track over the next several months," says Jerry J. Jasinowski, president of the National Association of Manufacturers, Washington, D.C. "However, it's much too early to break out the champagne," cautions Jasinowski. "The key to strong growth in 2003 and a meaningful recovery in manufacturing is an upturn in business investment, and we don't see that on the horizon yet." Even as the Conference Board was releasing its latest look at the leading economic indicators, the U.S. Labor Department was reporting that initial claims for unemployment insurance rose last week. For the week ending Jan. 18, claims totaled 381,000, an increase of 18,000 from the previous week's revised figure of 363,000. However, for the week ending Jan. 18, the four-week moving average for initial claims, a measure that some economists say better reflects underlying trends, was 386,500, a small decrease from the previous week's revised average of 388,500. "Our reading of the data is that, through the volatility, the trend is gradually downward again, consistent with the labor market slowly starting to regain momentum after a setback in late 2002," says Maury Harris, chief U.S. economist at UBS Warburg, New York.