The index of U.S. leading indicators climbed in January, an indication the economy will bounce back after winter storms damped economic growth at the beginning of 2014.
The Conference Board’s gauge of the outlook for the next three to six months rose 0.3 percent after no change in the prior month, the New York-based group said today. The advance matched the median forecast of 50 economists surveyed by Bloomberg.
Higher equity prices and home values last year have helped bolster household wealth, giving Americans the means to sustain spending after a winter-related slowdown. A pickup in job and wage growth following a decline in dismissals would provide an added spark for consumers whose purchases account for almost 70 percent of the economy.
“Interest rates are still extremely low and housing and equity wealth have generally been rising,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said before the report. “The backdrop in terms of financial conditions is quite favorable. I think we’ll continue to see solid growth once we get through the weather effects.”
Estimates in the Bloomberg survey ranged from a decrease of 0.2 percent to an increase of 0.6 percent, after a previously reported 0.1 percent December gain.
Five of the 10 indicators in the leading index contributed to the increase, today’s report showed. They included a drop in jobless claims and a pickup in factory orders. Declines in building permits and hours worked weighed on the measure.
Another report today showed fewer Americans filed applications for unemployment benefits last week, a sign employers are holding the line on firings even as cold weather slowed industries from manufacturing to housing. Jobless claims declined by 3,000 to 336,000 in the week ended Feb. 15, the Labor Department said.
The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1 percent for a second month. That index covers payrolls, incomes, sales and production, measures used by the National Bureau of Economic Research to determine when U.S. recessions start and end.
The gauge of lagging indicators increased 0.3 percent in January.
Snow and ice storms pummeled the eastern U.S. last week after a colder-than-normal January. The weather has played a role in depressing the economy as reports on retail sales, manufacturing, homebuilding and employment proved weaker than forecast.
“The increase in the Leading Economic Index reflects an economy that is expanding moderately, although the pace is somewhat held back by persistent and severe inclement weather in most parts of the country,” Ken Goldstein, an economist at the Conference Board, said in a statement today. “If the economy is going to move on to a faster track in 2014 compared to last year, consumer demand and especially investment will need to pick up significantly.”
Housing starts last month fell the most since February 2011, a Commerce Department report showed yesterday. Permits for future projects showed a smaller decline, a sign construction may pick up as the weather improves.
Payrolls in the U.S. rose less than projected in January, according to a report earlier this month from the Labor Department.
Some companies such as Cliffs Natural Resources Inc., a Cleveland-based iron and coal mining company, remain upbeat about the economy’s prospects.
“All signs are pointing to solid economic growth in the U.S. in 2014, supported by higher year-over-year motor vehicle production, an uptick in building construction and other fundamentals, which is expected to support domestic steel production and the related demand for steel making raw materials,” Gary B. Halverson, the company’s president and chief executive officer, said on a Feb. 14 earnings call.
Another report today showed Americans are less pessimistic about the economy. The share of consumers expecting the economy to worsen fell in February to an almost two-year low.
Thirty percent, the fewest since May 2012, said the economy was headed in the wrong direction, data from the Bloomberg Consumer Comfort Index (COMFCOMF) showed today. The gap between positive and negative expectations was minus 3, an eight-month high. The weekly measure was little changed at minus 30.6 for the period ended Feb. 16 from minus 30.7.
To contact the reporter on this story: Katherine Peralta in Washington at email@example.com