Associated Press
Leading Economic Indicator Index Declines
Thursday October 21, 12:04 pm ET
By Seth Sutel, AP Business Writer
Leading Economic Indicator Index Drops, Showing Economic Growth Slowdown; Jobless Claims Fall
NEW YORK (AP) -- A widely watched barometer of future economic activity edged lower in September for the fourth month in a row, suggesting a slowing in economic growth, a private research group reported Thursday.
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The Conference Board said that its Index of Leading Economic Indicators fell 0.1 percent last month, following declines of 0.3 percent in August and 0.3 percent in July.
The group said that while the weakness over the last several months in the economy has become more widespread, the declines in the leading indicator index are not yet large enough nor have they lasted long enough to suggest that the current economic expansion is ending.
The index is closely followed because it is designed to forecast the economy's health over the coming three to six months.
Conference Board economist Ken Goldstein called the September decline a "clear signal that the economy is losing momentum heading into 2005."
Goldstein said that after growing at an annual pace of nearly 4 percent in the third quarter, the economy is likely to expand at a slower pace in the fourth quarter of this year and the first quarter of next year. He said the hurricanes in September and rising energy prices may have held back some sectors in the economy such as home building.
The decline in the index was slightly less than the decline of 0.2 percent that some analysts were expecting. The 10-year Treasury bond, which tends to rise on indications that the economy is cooling, edged up 1/16 point to yield 3.98 percent, down from 3.99 percent late Wednesday. Stock market indicators were mixed.
Josh Feinman, chief economist at Deutsche Asset Management, called the decline in the leading indicators index consistent with other recent signs of slight deceleration on the economy, but he cautioned that signals remained mixed, making predictions difficult.
However, he noted a separate report from the Labor Department on Thursday showed a slight decline in the total number of people receiving unemployment benefits, which he called an indication that the labor market has been "plodding toward improvement."
The Labor Department also reported that the number of new people signing up for jobless benefits fell sharply last week, by a seasonally adjusted 25,000 to 329,000, marking the lowest level since early September and coming in slightly ahead of economists' expectations. Claims had risen by 16,000 in the previous week.
Thursday's report also showed that the number of people continuing to collect unemployment benefits fell by 8,000 to nearly 2.8 million for the week ending Oct. 9, the most recent period for which that information is available. That's an improvement from a year ago, when this figure stood at 3.5 million.
Despite the decline in the forward-looking indicator of economic activity, the Conference Board reported that its index of current economic conditions increased again in September, and that the signals for current growth are widespread in the economy.
All four parts of the current growth indicator increased last month, the group reported, including personal income, non-farm payrolls, manufacturing and trade sales and industrial production. The growth of 0.2 percent in that indicator followed growth of 0.1 percent in August.
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