Leading economic indicators rise in November

Adam Geller

Thursday, Dec. 19, 2002 | 9:49 a.m.

NEW YORK -- A yardstick of U.S. economic activity rose markedly in November in a sign that the nation's financial situation is beginning to improve, an industry group reported today.

In a separate announcement, the Labor Department said new jobless claims dropped last week, but remain high, suggesting a still sluggish employment market.

Even so, gradual improvement in the longer-term employment picture and a somewhat stronger financial sector helped boost consumer attitudes, pushing the Conference Board's Index of Leading Economic Indicators up 0.7 percent, the largest monthly gain in a year.

The increase, which was slightly above analysts' expectations, leaves the Index at 112.3, and follows a revised 0.1 percent gain in October.

"The financial market slump seems to be lifting a little this autumn. Recent consumer buying figures have somewhat allayed fears about a weak holiday season and consumer attitudes have also improved," Conference Board economist Ken Goldstein said. "The latest leading indicator readings show that at least some improvement is beginning to develop."

The jump in the index means the economic reading has now regained all the ground it has lost since May, and is now 3.6 percent higher than the low point it reached in March of last year.

The jump in the November index "is an encouraging sign that the economy is poised to pull out of the soft spot that we're in right now," said Gary Thayer, chief economist with A.G. Edwards & Sons in St. Louis. "We may not have strengthened too much yet, but it looks like we could see some better activity in the months ahead."

Meanwhile, the Labor Department report showed new claims for unemployment benefits remain high.

"While the labor market is not seriously falling off a cliff again, it is not really going anywhere," said economist Clifford Waldman, president of Waldman Associates.

The Labor Department reported new claims for jobless benefits fell by a seasonally adjusted 11,000 to 433,000 for the work week ending Dec. 14. Numbers above 400,000 are associated with a lackluster job market. The previous week, new claims had shot up by 86,000 in the biggest one-week gain since July 1992.

On Wall Street, the market turned lower after an initial boost following release of the reports. In late morning trading, the Dow Jones industrial average was down 47 to 8,401. The broader market also fell: the Nasdaq composite index declined 8 points to 1,354 and the Standard & Poor's 500 index was off 4 points to 888.

Five of the 10 indicators that make up the leading index rose in November, including stock prices and real money supply, the Conference Board said. Negative contributors included vendor performance and building permits. One component, average weekly manufacturing hours, held steady.