The index of U.S. leading indicators rose more than forecast in August, a sign the world’s largest economy is gaining strength.
The Conference Board’s gauge of the outlook for the next three to six months increased 0.7 percent after a revised 0.5 percent gain in July that was less than previously reported, the New York-based group said today. The median forecast of economists surveyed by Bloomberg called for a rise of 0.6 percent in August.
Gains in the job market and stock prices have boosted household wealth and are helping counter the effects of fiscal headwinds that have weighed on the economy. With the recovery still tenuous, Federal Reserve policy makers yesterday said they will continue their record $85 billion in bond purchases while they wait for more evidence of sustained progress.
“It suggests faster growth in the latter part of this year,” Kenneth Kim, economist at Stone & McCarthy Research Associates in Princeton, New Jersey, said before the report. “Recent gains in the stock market have helped purchases. Individuals have been taking wealth out of the market to buy cars.”
Estimates of 44 economists in the Bloomberg survey ranged from increases of 0.2 percent to 0.8 percent.
Another report today showed jobless claims in the U.S. rose less than forecast last week as two states began working through a backlog of applications that were caused by computer-system changeovers.
Applications for unemployment benefits climbed by 15,000 to 309,000 in the week ended Sept. 14 from a revised 294,000 in the prior period, a Labor Department report showed today in Washington. The median forecast of 53 economists surveyed by Bloomberg called for an increase to 330,000. A Labor Department spokesman said it could be a week or two before the state employment agencies are able to catch up on applications.
“The latest reading points to more pep in the pace of economic activity in the near term,” Conference Board economist Ken Goldstein said in a statement.
The index of coincident indicators, a gauge of current economic activity, increased 0.2 percent in August after a 0.1 percent rise in the prior month.
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.
At The Kroger Co., customers are spending more on cosmetics, greeting cards, Starbucks coffee, sushi and other discretionary items. At the same time, use of food stamps remains high at the Cincinnati, Ohio-based food retailer. Consumer confidence is improving “but at a slow and steady pace,” President and Chief Operating Officer W. Rodney McMullen said.
“Overall, customers continue to visit our stores more frequently, purchase fewer items per trip, and buy more on a monthly basis,” McMullen said on a Sept. 12 earnings call. “We would characterize the economy has continued to improve but fragile.”
The Conference Board’s gauge of lagging indicators increased 0.3 percent in August after a 0.1 percent decline in July.
While the economy continues to expand at a “moderate pace,” Fed policy makers said yesterday, they want “more evidence that progress will be sustained” before dialing back their $85 billion monthly asset purchases.
“Conditions in the job market today are still far from what all of us would like to see,” Chairman Ben S. Bernanke said at a press conference in Washington after a two-day meeting of the Federal Open Market Committee. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.”
Fed officials project U.S. gross domestic product to increase 2 percent to 2.3 percent this year and 2.9 percent to 3.1 percent in 2014.