Leading U.S. Indicators Rise More Than Forecast in Sign of Further Growth

The index of U.S. leading indicators climbed more than forecast in November, a sign that the world’s largest economy will keep growing in early 2012.

The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the New York-based research group said today. The median forecast of 54 economists surveyed by Bloomberg News projected the gauge would advance 0.3 percent.

Gains in manufacturing and consumer spending, alongside improvements in the housing market, indicate the economy will probably weather a possible recession in Europe. At the same time, political gridlock in Washington that threatens to cause a tax cut to expire raises the risk that household purchases and overall growth will cool early next year.

“The economy’s underlying momentum appears to be improving steadily as we head into next year,” Richard DeKaser, deputy chief economist at the Parthenon Group Inc. in Boston, said before the report. “The two areas which seem to be trending most favorably are the labor market and the housing market.”

Estimates in the Bloomberg survey ranged from no change to an increase of 0.6 percent.

The gain in the index “is pointing to continued growth,” Ken Goldstein, an economist at the Conference Board, said today in a statement, “possibly even gaining momentum” in early 2012. “However, this somewhat positive outlook for the domestic economy is at odds with a global economy that appears to be losing steam.”

Economic Growth

The U.S. economy expanded at a 1.8 percent annual rate in the third quarter after growing at a 1.3 percent pace in the prior three months, according to revised Commerce Department figures released today.

The number of applications for unemployment benefits unexpectedly dropped last week to the lowest since April 2008, a sign that the labor market is strengthening heading into 2012. Jobless claims fell by 4,000 to 364,000 in the week ended Dec. 17. The median forecast of 45 economists surveyed by Bloomberg News projected an increase to 380,000.

Consumer confidence rose last week to the highest level in five months as an improving job market and falling gasoline prices buoyed holiday shoppers.

The Bloomberg Consumer Comfort Index climbed to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The monthly expectations gauge climbed to minus 17 for December, a seven-month high.

Index Breakdown

Seven of the 10 components of the leading index contributed to the increase in November, led by the spread between short- and long-term interest rates and an increase in building permits.

The Conference Board’s index of coincident indicators, a gauge of current economic activity, increased 0.1 percent from the prior month.

The coincident index tracks payrolls, incomes, sales and production -- the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.

The gauge of lagging indicators climbed 0.1 percent last month. The index measures business lending, length of employment, service prices and ratios of labor costs, inventories and consumer credit.

Seven of the 10 indicators that make up the 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 goods and money supply adjusted for inflation.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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