Leading Indicators in U.S. Probably Rose a Ninth Straight Month in March

The index of U.S. leading economic indicators probably increased for a ninth month in March, signaling higher fuel costs will fail to derail the expansion, economists said before a report today.

The Conference Board’s gauge of the outlook for the next three to six months rose 0.3 percent after a 0.8 percent gain in February, according to the median forecast of 53 economists surveyed by Bloomberg News. Other data today may show claims for jobless benefits fell manufacturing continues to expand.

The labor market is improving and manufacturing is enjoying stronger export growth and business investment, underscoring the Federal Reserve’s view of a “moderate” economy. At the same time, the leading index was likely restrained by a drop in consumer expectations linked to higher gasoline prices that mean Americans have less to spend on other goods and services.

“The recovery seems to be strong enough to continue despite all these crises,” including unrest in the Middle East and north Africa that’s helped drive up oil prices, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “We probably have seen most of the impact of high oil prices in the first quarter.”

The New York-based Conference Board, a private research group, is scheduled to release its report at 10 a.m. Bloomberg survey estimates ranged from no change to a 0.5 percent increase.

10 Measures

Seven of the 10 measures that make up the Conference Board’s leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. The Conference Board estimates new orders for consumer goods, bookings for capital equipment and money supply adjusted for inflation.

In February, eight components contributed to the gain, including a positive spread between short- and long-term interest rates, an increase in stocks values and fewer people filing for unemployment benefits for the first time.

Jobless claims have declined since the beginning of the year. A Labor Department report at 8:30 a.m. in Washington may show fewer Americans filed first-time applications for unemployment benefits in the week ended April 16. New claims dropped by 22,000 to 390,000 from the prior week, according to the median forecast in the Bloomberg survey.

Manufacturing Mainstay

Factories have been the mainstay of the expansion that began in June 2009. The Federal Reserve Bank of Philadelphia’s general economic index, due at 10 a.m., will probably show manufacturing in the region moderated in April after expanding last month at the fastest pace in 27 years. The gauge eased to 36.8 from 43.4 in March, according to the median estimate in the Bloomberg survey.

Shares of machinery producers have outpaced the broader market so far this year. The Standard & Poor’s Supercomposite Machinery Index has gained 8.7 percent through yesterday compared with a 5.8 percent rise in the S&P 500.

Strength at the nation’s factories is spilling over into the rest of the economy. CSX Corp., the third-biggest U.S. railroad, said yesterday that profit rose 30 percent as shipping volumes increased.

“We’re continuing to see, quarter after quarter, the markets keep improving,” Chief Executive Officer Michael Ward said in an interview at Bloomberg News’ New York headquarters on April 6.

The Fed said April 13 in its Beige Book report in Washington that most of its districts “stated that gains were widespread across sectors” in February and March.

Hurdles for consumers, whose spending accounts for about 70 percent of the economy, include higher prices for fuel and food. The average price of a gallon of gasoline was $3.84 on April 19, the highest since September 2008. In March, gas averaged $3.53 a gallon, compared with $2.78 a year earlier.

                        Bloomberg Survey

================================================================
                           Initial    Cont.      LEI   Philly
                            Claims   Claims               Fed
                            ,000’s   ,000’s     MOM%    Index
================================================================

Date of Release              04/21    04/21    04/21    04/21
Observation Period          16-Apr    9-Apr    March    March
----------------------------------------------------------------
Median                         390     3675     0.3%     36.8
Average                        392     3679     0.3%     36.2
High Forecast                  410     3800     0.5%     43.8
Low Forecast                   370     3650     0.0%     28.0
Number of Participants          47       17       53       55
Previous                       412     3680     0.8%     43.4
----------------------------------------------------------------
4CAST Ltd.                     390     ---      0.4%     38.5
ABN Amro Inc.                  390     ---      ---      38.0
Action Economics               385     3670     0.4%     38.0
Aletti Gestielle SGR           385     ---      0.1%     36.0
Ameriprise Financial Inc       390     3680     0.4%     35.0
Banesto                       ---      ---      0.2%     37.5
Bank of Tokyo- Mitsubishi      390     ---      0.2%     32.4
Barclays Capital               390     ---      0.3%     36.0
Bayerische Landesbank         ---      ---      0.4%     ---
BBVA                           395     3660     0.5%     33.0
BMO Capital Markets            390     3682     0.3%     36.8
BNP Paribas                    395     ---      0.4%     38.0
BofA Merrill Lynch Resear      400     ---      0.2%     38.0
Briefing.com                   370     3650     0.2%     30.0
Capital Economics             ---      ---      0.3%     35.0
CIBC World Markets            ---      ---      0.3%     35.0
Citi                           390     3670     0.2%     30.0
ClearView Economics           ---      ---      ---      38.0
Commerzbank AG                 400     ---      0.5%     37.0
Credit Agricole CIB           ---      ---      ---      40.0
Credit Suisse                  390     ---      0.1%     ---
Daiwa Securities America      ---      ---      0.1%     ---
DekaBank                      ---      ---      0.3%     35.0
Desjardins Group               388     ---      0.2%     35.0
Deutsche Bank Securities       390     ---      0.5%     36.0
Deutsche Postbank AG          ---      ---      0.3%     ---
Fact & Opinion Economics       385     ---      0.4%     41.0
First Trust Advisors           398     ---      0.5%     35.8
Goldman, Sachs & Co.          ---      ---      ---      33.0
Helaba                         400     ---      0.3%     35.0
HSBC Markets                   400     ---      ---      35.0
Hugh Johnson Advisors         ---      ---      0.1%     40.0
IDEAglobal                     395     ---      0.3%     38.0
Informa Global Markets         400     3665     0.2%     39.0
ING Financial Markets          395     3675     0.3%     37.5
Insight Economics              390     3650     0.3%     35.0
Intesa-SanPaulo               ---      ---      ---      37.5
J.P. Morgan Chase              400     ---      ---      39.0
Janney Montgomery Scott L     ---      ---      0.3%     ---
Jefferies & Co.                395     ---      ---      33.0
Landesbank Berlin              375     ---      0.0%     28.0
Landesbank BW                 ---      ---      ---      37.5
Manulife Asset Management      400     3700     ---      ---
Maria Fiorini Ramirez Inc      400     ---      ---      ---
MF Global                      395     ---      0.2%     30.0
Moody’s Analytics              405     3680     0.2%     40.0
Morgan Keegan & Co.           ---      ---      0.3%     ---
Morgan Stanley & Co.          ---      ---      0.1%     ---
Nomura Securities Intl.       ---      ---      0.5%     32.0
Nord/LB                        400     ---      ---      38.0
Parthenon Group                393     ---      0.3%     32.8
Pierpont Securities LLC        390     ---      ---      ---
PineBridge Investments         380     ---      0.5%     41.0
PNC Bank                      ---      ---      0.3%     ---
Raymond James                 ---      ---      0.1%     ---
RBC Capital Markets            410     ---      ---      32.0
RBS Securities Inc.            390     ---      ---      ---
Scotia Capital                 400     3800     ---      40.0
Societe Generale               382     3650     ---      43.8
Standard Chartered             380     3703     0.3%     35.0
State Street Global Marke      390     3689     0.3%     38.5
Stone & McCarthy Research      385     ---      0.4%     35.7
TD Securities                  380     3650     0.2%     35.0
UBS                            400     ---      0.1%     40.0
UniCredit Research            ---      ---      0.3%     ---
University of Maryland         385     ---      0.3%     39.0
Wells Fargo & Co.             ---      ---      0.5%     ---
WestLB AG                     ---      ---      0.1%     37.0
Westpac Banking Co.           ---      ---      0.3%     30.0
Wrightson ICAP                 385     3675     0.4%     38.0
================================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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