Economy appears to be gaining some momentum
NEW YORK — A closely watched gauge of future economic activity edged higher in April, providing more evidence of a sustained recovery.
The Conference Board said its Composite Index of Leading Economic Indicators rose 0.1 percent in April, after a revised gain of 0.8 percent the previous month. The latest increase reported by the New York-based private research group was slightly lower than the 0.2 percent rise forecast by analysts.
But together with a March reading that was notably stronger than first reported, the April uptick points to an economy with plenty of momentum, economists said.
“We’re still growing at an above-average rate, and it looks like that kind of growth can continue,” said Gary Thayer, chief economist with A.G. Edwards & Sons Inc. in St. Louis.
The index is tracked as a measure of the economy’s direction during the coming six months. Of the 10 components making up the index, four increased last month, including the real money supply, building permits and stock prices.
In other economic news Thursday, the Labor Department reported that initial claims for unemployment benefits rose by 12,000 to 345,000 last week. That was higher than the 326,000 forecast by analysts. But the more stable four-week moving average of claims declined to 333,500, the lowest level since November 2000.
The rise in the Conference Board’s April index marks the 12th increase in the past 13 months. The only exception was February, when the index held steady.
The leading index has now risen by 1.8 percent over the past six months, signaling the likelihood of strong growth through the third quarter of this year.
“While there are growing concerns about rising gasoline prices this spring, as well as worries about what happens after all the tax refunds have been spent, the indicators are not signaling any softening in America’s basic economic fundamentals,” said Ken Goldstein, an economist for the Conference Board.
Mark Vitner, an economist at Wachovia Corp., agreed, but said pricier gas and higher interest rates could be key, because their impact won’t likely be felt until next year.
“The real question mark is going to be 2005,” he said.
The Conference Board also said its gauge of current economic activity continued to strengthen in April, rising 0.3 percent.
At the same time the group’s lagging index, which reflects the economic climate in the recent past, increased 0.2 percent last month, following a 0.1 percent dip in March.
The slight rise in the leading indicators in April follows a significant increase in the previous month. The board had originally a reported a 0.3 percent increase, but revised that figure up to 0.8 percent.
While investors are fretting about rising interest rates, the reading shows the higher borrowing costs are not likely to slow growth in the economy or jobs, Goldstein said.
Stocks were higher in afternoon trading. The Dow Jones industrial average was up 10.65 to 9,948.36 while the Standard & Poor’s 500 index gained 1.64 to 1,090.33 and the Nasdaq composite index was up 1.88 at 1,900.05.