Top economic indicators rise
NEW YORK -- A key economic forecasting gauge rose a solid 0.3 percent in November, and the government reported a drop in claims for jobless benefits Thursday, presaging what economists believe could be strong growth in 2004.
In New York, the business-funded Conference Board said its Composite Index of Leading Economic Indicators advanced 0.3 percent in November to 114.2, suggesting that the economic recovery will gain momentum next year.
Last month's performance followed a revised increase of 0.5 percent in October to 113.9.
In Washington, the Labor Department said new claims for unemployment benefits fell sharply last week.
For the work week ending Dec. 13, new applications for benefits declined by a seasonally adjusted 22,000 to 353,000, the lowest level since Nov. 1. The drop was much larger than economists were expecting.
"The holiday season is looking brighter for job seekers and the New Year may be dawning even brighter still," said Oscar Gonzalez, economist at John Hancock Financial Services.
Also Thursday, mortgage giant Freddie Mac said that rates on 30-year and 15-year mortgages declined for the second week in a row, suggesting that the housing market will continue to boom.
The index of leading indicators is closely watched because it forecasts trends in the economy in the next three to six months.
The U.S. economy was slow to pick up following the recession in 2001. But many analysts now believe the recovery is deepening and widening and say growth next year could exceed 4 percent.
Gary R. Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, Mo., said the second consecutive increase in the index of leading indicators "suggests the economy is poised to do well going into next year."
He noted that corporate profits have strengthened and added: "We're also seeing gains both in jobs and capital spending, two areas of the economy that were weak."
The Conference Board said six of the 10 indicators contributed to November's advance. They included improvement in claims for unemployment, consumer sentiment, vendor performance, average weekly manufacturing hours, stock prices and the spread in interest rates.
The decliners were building permits, the money supply, new orders for capital goods, and new orders for consumer goods and materials.