Leading indicators jump 1.4 pct, topping estimates
AP Business Writer
NEW YORK – A gauge of future economic activity jumped 1.4 percent in March, the fastest pace of growth in 10 months.
The rise in the Conference Board’s index of leading economic indictors suggests economic growth is likely to continue for the next three to six months.
Economists polled by Thomson Reuters had expected the index to grow 0.9 percent last month.
The report says the leading indicators’ growth was 0.4 percent in February and 0.6 percent in January, up from previous estimates of 0.1 percent and 0.3 percent.
“The indicators point to a slow recovery that should continue over the next few months,” Ken Goldstein, an economist at the Conference Board, said.
The gauge is made up of data on housing, jobs, manufacturing and financial markets, most of which has already been released. Seven of the 10 indicators increased in March, led by a big difference between overnight and 10-year interest rates, known as the interest rate spread, and a pickup in average weekly hours worked in the manufacturing sector.
A widening gap between short- and long-term interest rates is often a positive signal. It can mean investors expect economic activity to pick up.
Building permits for homes and rising stock prices also propped up the index. A decrease in consumer expectations, the money supply and manufacturers’ new orders for capital goods weighed it down.
Some of the bounce was due to a rebound from the harsh winter that suppressed activity in the housing market and at factories in the Northeast, said economist Josh Shapiro at research firm MFR Inc.
But the stronger reading also reflects recent data about the economy, said Jennifer Lee, an economist at BMO Capital Markets. Consumer spending at shops, employment figures and corporate spending on technology have all improved.
The economy added 162,000 jobs in March, the biggest gain in three years, according to the government.
“A year ago, I don’t think anyone would have seen such a nice recovery in the U.S. economy,” Lee said. Last week, BMO raised its estimate for 2010 gross domestic product to 3.3 percent growth, up from 3.1 percent, because of stronger consumer spending, manufacturing and hiring.