March 21 (Bloomberg) -- The index of U.S. leading indicators rose more than forecast in February, indicating the world’s largest economy is strengthening.
The Conference Board’s gauge of the outlook for the next three to six months climbed 0.5 percent for the second straight month, the New York-based group said today. The median forecast of economists surveyed by Bloomberg called for an increase of 0.4 percent.
Declining claims for jobless benefits and more hiring add to evidence that the labor market is improving, while housing continues to recover and rising stock prices have boosted household wealth. The gains signal consumers will sustain their spending, which accounts for about 70 percent of the economy.
“The economy is picking up,” Sam Coffin, an economist for UBS Securities LLC in Stamford, Connecticut, said before the report. UBS ranked third among forecasters of the leading indicators index over the past two years, according to data compiled by Bloomberg. “The improvement in the labor market is a driver. The housing recovery is going along. The stock market is adding quite a bit” to the gain in the index.
Estimates of 47 economists in the Bloomberg survey ranged from an increase of 0.8 percent to no change. The February reading was the same as the January gain, which was revised up from 0.2 percent.
Eight of the 10 indicators in the leading index contributed to the increase, helped by more building permits, fewer jobless claims and higher stock prices.
“This reading increases hope that it may pick up some momentum in the second half of the year,” Ken Goldstein, an economist at the Conference Board, said in a statement today, referring to the economy.
The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.2 percent in February after falling 1 percent in 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 advanced 0.1 percent after a 1.6 percent gain in January.
A separate report from the Labor Department today showed the labor market is maintaining its recent progress. Fewer Americans than forecast filed first-time claims for unemployment insurance last week. Applications for jobless benefits increased by 2,000 to 336,000 in the week ended March 16. Economists projected 340,000 claims, according to the median estimate in a Bloomberg survey. The monthly average, a less volatile measure, fell to the lowest level since February 2008.
United Technologies Corp., the maker of Pratt & Whitney jet engines and Otis elevators, is among companies that expect the economic expansion to continue even as cuts in U.S. military spending trim its profits.
“The U.S. economy is better and it is going to continue to get better,” Gregory Hayes, chief financial officer at Hartford, Connecticut-based United Technologies, said at a March 14 analyst meeting. “We’ve got another year and a half or so probably of low interest-rate environment, which we could hope to capitalize on.”
Federal Reserve policy makers said they will continue with bond buying at a pace of $85 billion a month to spur economic growth and trim unemployment.
Recent data suggest “a return to moderate economic growth following a pause late last year,” the policy makers said in a statement yesterday following a two-day meeting in Washington.
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