Leading Economic Index, Philly Fed Point to Recovery

Leading Economic Index, Philly Fed Point to Recovery

The Conference Board's gauge of future economic conditions rose in November, for its 8th straight monthly increase, boosted by improving financial conditions, employment and housing, the private research group said Thursday.


The Leading Economic Index increased 0.9 percent to 104.9 after rising an unrevised 0.3 percent in October. Analysts polled by Reuters had expected it to increase 0.7 percent.

The index "has been on an uptrend for more than half a year and it is now slightly higher than its latest peak in July 2007," said Conference Board Economist Ataman Ozyildirim in a statement.

The string of increases signals that the economy will slowly improve through 2010, said Conference Board Economist Ken Goldstein.

He noted that in November the employment level held steady, making this the first month since December 2007 that it did not drag on the index.

The coincident index, a measure of current economic conditions, also rose, by 0.2 percent, in November. But the lagging index fell 0.4 percent.


In a separate report, the Philadelphia Federal Reserve Bank said factory activity accelerated rapidly in the U.S. Mid-Atlantic region in December, hitting its highest in 4-1/2 years and assuaging some worries the industrial recovery is slowing.

Confounding market forecasts for growth to slow slightly, the Philadelphia Fed said its business activity index rose to 20.4 from 16.7 in November. Analysts polled by Reuters had expected a reading of 16.0.

Their forecasts ranged from 6.9 to 20.0. Any reading above zero indicates growth in the region's manufacturing sector.

"This will mitigate concerns that the factory sector might be slowing," said Tony Crescenzi, market strategist and portfolio manager at PIMCO in Newport Beach, California.

U.S. stocks initially trimmed their losses after the Philly Fed data. Government bonds, which perform better during times of economic weakness, trimmed their gains.

The survey covers factories in a region encompassing eastern Pennsylvania, southern New Jersey and Delaware and is looked at closely as one of the first indicators of the health of the U.S. manufacturing sector.

It is likely to offset some worries that national factory activity is slowing after a barometer of manufacturing in New York State, the Empire State index, unexpectedly plummeted in December, according to a report released on Tuesday.

cnbc.com