Text 14217, 113 rader
Skriven 2005-07-21 21:16:00 av Jeff Binkley (1:226/600)
Ärende: ECONOMY
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More bad news for the democrats....

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http://biz.yahoo.com/ap/050721/economy.html?.v=9


Leading Indicators Up, Jobless Claims Down

Thursday July 21, 5:06 pm ET
By Eileen Alt Powell, AP Business Writer
Leading Indicators Rise Strongly, Jobless Claims Down Sharply


NEW YORK (AP) -- An important gauge of future economic activity rose strongly
in June and jobless benefit claims dropped last week by the greatest amount in
more than 2 years, suggesting that the U.S. economy is continuing to grow.

But many analysts believe the expansion has begun slowing from last year's
torrid pace in response to Federal Reserve hikes in U.S. interest rates.

The New York-based Conference Board said Thursday that its Composite Index of
Leading Economic Indicators increased 0.9 percent in June to 137.7 after
showing no change the month before and a 0.2 percent rise in April.

The June increase was the largest since a 0.9 percent rise in December 2003,
the board said.

The index is watched closely because it is designed to predict economic
activity over the next three to six months.

In Washington, meanwhile, the Labor Department reported that the number of
Americans filing new claims for unemployment benefits plunged last week by the
largest amount in 2 1/2 years. The department said new benefit claims dropped
34,000 to a total of 303,000 as the labor market continued to strengthen.

Government analysts attributed the improvement to a slowdown in layoffs in the
auto industry, which had seen big increases in recent weeks as auto plants shut
down temporarily to retool for the new model year.

The drop of 34,000 was the largest one-week improvement since a decline of
35,000 in the week of Dec. 21, 2002. The decline was more than triple the
10,000 drop that private analysts had been predicting.

Economists said the latest statistics show the economic expansion is
continuing, though probably at a slower rate than last year.

Anthony Chan, managing director and senior economist at JPMorgan Fleming Asset
Management in Columbus, Ohio, said the leading index performance in June was
solid, with broad-based gains in most of its 10 components, including consumer
sentiment.

"It tells us that the economic expansion is probably on track," Chan said.

At the same time, he said, the economy's growth rate appears to be slowing from
its 4.4 percent expansion in 2004. He predicted the economy would grow 3.5
percent this year and about 3.25 percent in 2006.

Chan said the Federal Reserve rate increases were designed to do that and
added: "We're on track, moving toward a mission-accomplished point." The Fed
has raised rates nine times in the past year and is expected to increase them
again at its August meeting.

The Conference Board had announced last month that it was revising its index,
and the latest figures incorporate a statistical trend adjustment as well as a
new way of accounting for interest rate spreads. Details of the changes were
posted on its Web site, http://www.conference-board.org.

The leading index figures were based on revised calculations. The last time the
gauge underwent a major revision was in 1996, shortly after the Conference
Board, an industry-backed research group, took over calculating the index from
the Commerce Department in Washington, D.C.

Without the revisions, the index of leading indicators would have shown an
increase of 0.5 percent in June following a dip of 0.2 percent in May, the
Conference Board said.

The board said the revised index has increased at a 1.2 percent annual rate
over the past six months, down from a peak of about 10 percent at the end of
2003.

Gail D. Fosler, the board's chief economist, told reporters that this is
consistent with weaker economic growth.

"We believe the industrial economy is slowing down, that it is slowing down
quite quickly," Fosler said. She added, however, that she did not believe a
recession was in the offing, saying "we are way far away from anything that
looks like a recession signal."

Mark Vitner, senior economist at Wachovia Securities in Charlotte, N.C., also
said the economy was slowing.

"The stimulus from the tax cuts and low interest rates in place in 2003 have
played out," Vitner said. "Now the economy is returning to a more-sustainable
growth rate."

Seven of the 10 indicators that make up the leading index increased in June:
consumer expectations, vendor performance, the money supply, a decline in
unemployment claims, the interest rate spread, stock prices and building
permits. One component, manufacturers' new orders for nondefense products,
declined, while weekly manufacturing hours and manufacturers' new orders for
consumer goods were unchanged.

The index of coincident indicators, which measures current economic activity,
rose 0.2 percent in June to 120.5 after increasing 0.1 percent in May to 120.2.

The index of lagging indicators, a measure of past economic performance, was up
0.3 percent in June to 119.7 after advancing 0.4 percent in May to 119.4.

http://www.conference-board.org

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