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Leading index signals US growth to pick up into 2014

Labor Department figures showed the number of claims for jobless benefits in the month ended Aug. 17 declined.Justin Sullivan/Getty Images

WASHINGTON — The index of US leading indicators climbed in July by the most in three months, signaling improvements in housing and labor markets will help foster faster economic growth through the year's-end.

The Conference Board's gauge of the outlook for the next three to six months increased 0.6 percent after no change in June, the New York-based group said Thursday. Another report showed the fewest Americans since November 2007 filed applications for unemployment benefits in the past month.

The rise in the index of leading indicators was propelled by the drop in firings, rising stock prices, and a thaw in lending that all point to a pickup in consumer spending. More sales of appliances and home-improvement merchandise at retailers such as Home Depot Inc. and Lowe's Cos. show the recovery in housing is filtering into other parts of the economy.


''One of the big underpinnings is obviously the housing market,'' said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, N.C.. Economists at Wells Fargo are the best forecasters of the LEI in the last two years, according to data compiled by Bloomberg. The leading indicators are ''consistent with the outlook for gradual improvement in the US economy.''

Chinese manufacturing resumed expansion this month after shrinking in July by the most in almost a year and output at European plants and services companies improved, other reports today showed.

Signs that global demand is stabilizing and an improving outlook in the United States are encouraging US employers to maintain headcount. Labor Department figures showed the number of claims for jobless benefits in the month ended Aug. 17 fell by 2,300 to 330,500 a week on average, the least in more than five years.

The four-week moving average is a less volatile measure than the weekly figures, and is considered a better gauge of the trend in applications.


There is ''legitimate improvement in the labor market,'' said Ryan Sweet, a senior economist at Moody's Analytics Inc. in West Chester, Penn. ''It's more important to put the emphasis on the trend in claims, which remains favorable.''

Last week included the 12th of the month, which coincides with the period the Labor Department surveys employers to calculate monthly payroll data. The four-week average was down from the 346,500 average during the comparable period in July. The employment report for August will be released Sept. 6.

The median forecast in a Bloomberg survey of 42 economists for the leading economic indicators index called for a 0.5 percent advance. Estimates ranged from increases of 0.2 percent to 0.7 percent.

Eight of the 10 indicators in the leading index strengthened in July, led by a widening gap between long- and short-term interest rates, higher stocks, and more building permits. Fewer jobless claims and gains in factory orders also propelled the leading index last month.

The report also showed that loans are becoming easier to get. The rise in the Conference Board's proprietary credit index, which takes into account reports such as the Federal Reserve's loan officer survey and investor sentiment, matched the gain in February 2011 as the biggest since January 2004.

The improvement indicates ''better economic and job growth in the second half of 2013,'' Ken Goldstein, a Conference Board economist, said in a statement. ''However, the biggest uncertainties remain the pace of business spending and the impact of slower global growth on US exports.''


Strength in the housing market is contributing to economic growth and bolstering sales at home-improvement retailers such as Lowe's and Home Depot. Both companies reported earnings this week that beat analysts' estimates and raised their profit forecasts for 2013.