Leading indicators rise for 3rd month

Brad Foss

Monday, July 21, 2003 | 9:52 a.m.

A key measure of future economic activity increased slightly in June for the third month in a row, in line with analysts' expectations.

The report lent support to the view among economists that the worst was over, although it did not alter their opinion that consumers and businesses still are on shaky ground.

The Conference Board reported today that its Index of Leading Economic Indicators rose by 0.1 percent in June to 111.8, after a 1.1 percent rise in May and a 0.1 percent rise in April. However, the board said it was too soon to declare the start of a period of steady economic growth.

"I still think we need to be a little cautious," said Ken Goldstein, an economist for the board.

"But," he added, "we may finally, after a year and a half delay, be moving into a real recovery."

Sung Won Sohn, chief economist at Wells Fargo in Minneapolis, was equally circumspect.

"We have really not seen meaningful economic growth so far, especially in employment," Sohn said.

The index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Four of the ten components of the leading index rose in June, including the real money supply, stock prices and building permits.

Sohn said the tax cut, low interest rates and the weaker dollar have not provided the economic stimulus many have been hoping for and that business confidence remains low.

"And now that the mortgage rates are rising," he added, "housing may not be as supportive as it has been in the past. So we're not out of the woods yet, by any means."

One hopeful sign, according to Sohn, is that business spending on equipment and technology has been on the rise for the past year.

The coincident index, which measures current economic conditions, increased 0.1 percent in June, the group reported. The lagging index dropped 0.5 percent.