Index of leading indicators gains again in December

NEW YORK -- The third consecutive monthly gain in a key gauge of U.S. economic activity signaled that the nation's recession may soon be over, but investors continued to fret about the timing of a recovery.

The New York-based Conference Board said Tuesday that its Index of Leading Economic Indicators rose a strong 1.2 percent in December following a revised rise of 0.8 percent in November and an increase of 0.1 percent in October. It was the largest monthly gain since February 1996.

Analysts had been expecting a December increase of about 0.7 percent.

Three upward movements in the index generally indicate that the economy will expand in the next three to six months. The economy has been contracting since March.

The Conference Board, a business-funded research group, said the November-December gains were the largest for two consecutive months since November-December 1992 following the 1990-91 recession.

"The strong signal from the indicators means that the recession could be over soon," the board's economist, Ken Goldstein, said in a statement accompanying the report. "Three successive monthly increases, each larger than the one before, bring the level of the leading series above the pre-recession peak."

He attributed the latest rises to Federal Reserve cuts in short-term interest rates and strong growth in the nation's money supply.

But the report failed to impress investors.

The Dow Jones industrial average closed down 58.05, or 0.6 percent, at 9,713.80, falling back from an earlier advance of 70.

Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, called the December report "a very positive sign for the economy."