NEW YORK - The index of leading U.S. economic indicators rose in November as stock prices and consumer demand climbed.
The Conference Board reported Wednesday that its index gained 0.3%, the second straight monthly increase and higher than the 0.2% rise expected by analysts. The index rose 0.1% in October - previously reported as unchanged.
The uptick "points to sustained economic growth in 2000," said Peter Kretzmer, senior economist at Banc of America Securities in New York. Though Federal Reserve policymakers will probably raise interest rates to cool demand, "the momentum heading into the new year remains very significant," he said.
November's increase in the composite of 10 indicators was the largest since another 0.3% gain in July.
A drop in August and no change in September were attributed to a severe hurricane season that included Hurricane Floyd, which closed factories and other businesses along the East Coast in September.
A jump in stock prices and factory orders for consumer goods accounted for almost all of last month's rise. Higher consumer confidence, expansion of the money supply, an increase in building permits, and low numbers of initial claims for state unemployment benefits also contributed.
A shorter factory work week and a narrower spread between present and future interest rates subtracted from the index, which was also hurt by a drop in orders for nondefense capital goods and a faster rate of vendor deliveries - a sign of weak demand.
The index of coincident indicators, a gauge of current economic activity including industrial output, rose 0.2% last month after gaining 0.6% in October. The index of lagging indicators gained 0.3% after falling by the same rate in October.
Consumer confidence rose in December, to its second-highest level ever, according to Conference Board data released Tuesday. Stock market gains were among the factors cited.
- Bloomberg News
