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U.S. Leading Indicators Post Sharp Rise

It may be time for forecasters to reconsider their predictions of a decided U.S. economic slowdown by midyear. Manufacturing continues to expand. Housing starts and building permits are on the rise. And in January, the Conference Board's index of leading economic indicators advanced an impressive 1.1%, its fifth increase during the past six months.

The leading index now stands at 140.1 (1996=100).

Six of the ten elements that make up the leading index were positive in January, with a lower weekly average for initial unemployment insurance claims the most positive of them all.

The U.S. economy may have slowed in the fourth quarter of 2005 -- the Commerce Department's initial estimate was an annual rate of just 1.1%. But the index of leading indicators signals that the slowdown was short-lived. Indeed, "the current behavior of the leading index suggests that the sluggish growth in the fourth quarter should not persist and economic growth is likely to pick up in the near term," says the Conference Board, a New York-based business research group.

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