The index of U.S. leading economic indicators fell in August, led by a decline in new orders for manufacturing.
The Conference Board’s gauge of the outlook for the next three to six months decreased 0.1 percent after a revised 0.5 percent increase in July, the New York-based group reported today. Economists projected the gauge would fall by 0.1 percent, according to the median estimate in a Bloomberg survey.
“The economy is still struggling to gain momentum,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, before today’s report. “We’re getting mixed messages on its health.”
The Federal Reserve last week undertook a third round of large-scale asset purchases in a bid to stimulate the economy and reduce joblessness that has held above 8 percent since February 2009. Weaker consumer spending and the looming fiscal U.S. cliff of tax and government spending changes are dimming the outlook for U.S. manufacturing. If Congress doesn’t act, more than $600 billion in automatic tax increases and spending cuts will take effect starting in January.
“The economy continues to be buffeted by strong headwinds domestically and internationally,” said Ken Goldstein, an economist with the Conference Board. “As a result, the pace of growth is unlikely to change much in the coming months.”
New orders for manufacturing fell 0.17 percent in August after a 0.15 percent drop in July. The decline in the leading index was also driven by weakness in consumer expectations and the labor market.
Estimates from 51 economists in the Bloomberg survey ranged from a decrease of 0.3 percent to an increase of 0.4 percent in the Conference Board’s leading index.
Six of the 10 indicators in the index contributed to the decrease. Four indicators increased, including stock prices.
The Conference Board’s index of coincident indicators, a gauge of current economic activity, increased 0.1 percent.
The coincident index tracks payrolls, incomes, sales and production, measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.
The gauge of lagging indicators rose 0.2 percent in August after increasing 0.3 percent the previous month.
Sales of previously owned homes and work on single-family projects climbed in August to the highest levels in two years. Purchases of existing houses increased 7.8 percent to a 4.82 million annual rate, the most since May 2010, figures from the National Association of Realtors showed yesterday in Washington.
Record-low mortgage rates, more affordable properties and limited supply of new homes are driving orders at home builders.
The number of Americans who filed applications for unemployment benefits decreased by 3,000 in the week ended Sept. 15 to 382,000, the Labor Department said today in Washington.
Federal Reserve policymakers last week said they would keep interest rates “exceptionally low” at least through mid-2015 and committed to purchasing $40 billion a month in mortgage debt, their third round of large-scale asset purchases since
“The idea is to quicken the recovery, to help the economy begin to grow quickly enough to generate new jobs and to reduce the unemployment rate,” Federal Reserve Chairman Ben S. Bernanke said at a Sept. 13 press conference.
The improvement in housing hasn’t yet been enough to boost business at cable and telecom companies including Time Warner Cable Inc.
Time Warner President and Chief Operating Officer Robert Marcus, calling housing growth “modestly positive”, said he is still looking for stronger overall improvement to the economy.
“The real important economic stats for us in terms of potential wind at our back really relate to improvements in occupied housing, improvements in the unemployment stats, increases in disposable income and increases in consumer confidence,” Marcus said on a Sept. 19 conference call. “To tell you the truth, we really haven’t seen a whole lot of meaningful improvement in those stats across our footprint.”
“It’s still pretty tough out there and while I look forward to the day when the economy is going to provide us with some fuel for growth, I don’t think we’re quite there yet,” Marcus said.