Leading indicators in US rise

The index of US leading indicators rose in July by the most in three months, showing the world’s largest economy will improve in the second half of 2013.

By Jeanna Smialek (Bloomberg)

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Published: Fri 23 Aug 2013, 11:05 PM

Last updated: Sat 4 Apr 2015, 10:35 AM

The Conference Board’s gauge of the outlook for the next three to six months increased 0.6 per cent after no change the prior month, the New York-based group said on Thursday. The median forecast in a Bloomberg survey of economists called for a 0.5 per cent advance.

The boost to household wealth from higher stock prices and a stronger housing market is helping sustain the consumer spending that accounts for about 70 per cent of gross domestic product. More business investment in new equipment would provide an additional spark for an expansion the Federal Reserve projects will pick up the rest of the year.

“Consumers have been expanding their spending, but at a relatively modest pace,” Russell Price, senior economist at Ameriprise Financial in Detroit, said before the report. “In the second half of the year, we hope to see GDP improve somewhat as government spending cuts stabilise. The recent improvement in new orders for business equipment bode well for the economy.”

Estimates of 42 economists in the Bloomberg survey ranged increases of 0.2 per cent to 0.7 per cent.

Eight of the 10 indicators in the leading index strengthened in July, led by cheaper borrowing costs, higher stocks and more building permits. Fewer jobless claims and gains in factory orders also propelled the leading index last month.

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