Leading economic indicator up in Sept
The Business Times (19 October 2007)
Report shows no impending economic collapse but analysts expect slow growth this quarter and next
The Business Times (19 October 2007)
Report shows no impending economic collapse but analysts expect slow growth this quarter and next
(WASHINGTON) The index of leading US economic indicators rose in September as stock prices climbed and fewer Americans lost their jobs, a private report shows. The Conference Board's gauge rose 0.3 per cent, as forecast, after a 0.8 per cent August decrease that was larger than previously estimated, the New York-based group said yesterday. The measure points to the direction of the economy over the next three to six months. Stocks turned in the biggest September advance since 1998 after the Federal Reserve cut interest rates to sustain the expansion as sub-prime lending collapsed. The report reinforces forecasts that the housing slump will not tip the economy into recession even as growth is likely to slow. The report 'isn't sending a message of impending economic collapse, but it's not a strong message either', said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc, a New York forecasting firm.
'We are going to see pretty painfully slow growth this quarter and next,' he said. Mr Shapiro accurately forecast the increase. The index was forecast to rise 0.3 per cent following a previously reported 0.6 per cent drop in August, according to the median of 62 economists' projections in a Bloomberg News survey. Estimates ranged from a 0.3 per cent decline to a 0.6 per cent gain. The revised decline in August was the biggest since September 2001. The Fed on Sept 18 lowered its benchmark interest rate by a half point to 4.75 per cent, the first cut in four years, lifting the Standard & Poor's 500 almost 3 per cent that day. The S&P averaged 1,497.1 in September, up from 1,454.6 in August. Stocks rose to a record this month. The rise in the S&P index added 0.11 percentage point to leading indicators. Stock prices rose to a record this month. A gain in the Reuters/University of Michigan consumer expectations gauge added 0.01 percentage point. Seven of the 10 economic indicators that make up the index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, supplier delivery times and factory hours. The Conference Board estimates money supply, new orders for consumer goods and orders for non- defence capital goods. Money supply adjusted for inflation, which has the biggest weighting in the index, contributed 0.08 percentage point. Building permits subtracted 0.2 percentage point from the leading indicators index. Permits, a sign of future construction, fell 7.3 per cent to a 1.226 million pace, the lowest since 1995. Economists still expect declining home prices and tougher lending standards to weigh on consumer spending this quarter. -- Bloomberg
'We are going to see pretty painfully slow growth this quarter and next,' he said. Mr Shapiro accurately forecast the increase. The index was forecast to rise 0.3 per cent following a previously reported 0.6 per cent drop in August, according to the median of 62 economists' projections in a Bloomberg News survey. Estimates ranged from a 0.3 per cent decline to a 0.6 per cent gain. The revised decline in August was the biggest since September 2001. The Fed on Sept 18 lowered its benchmark interest rate by a half point to 4.75 per cent, the first cut in four years, lifting the Standard & Poor's 500 almost 3 per cent that day. The S&P averaged 1,497.1 in September, up from 1,454.6 in August. Stocks rose to a record this month. The rise in the S&P index added 0.11 percentage point to leading indicators. Stock prices rose to a record this month. A gain in the Reuters/University of Michigan consumer expectations gauge added 0.01 percentage point. Seven of the 10 economic indicators that make up the index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, supplier delivery times and factory hours. The Conference Board estimates money supply, new orders for consumer goods and orders for non- defence capital goods. Money supply adjusted for inflation, which has the biggest weighting in the index, contributed 0.08 percentage point. Building permits subtracted 0.2 percentage point from the leading indicators index. Permits, a sign of future construction, fell 7.3 per cent to a 1.226 million pace, the lowest since 1995. Economists still expect declining home prices and tougher lending standards to weigh on consumer spending this quarter. -- Bloomberg
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