Leading indicator index suggests slow growth ahead
NEW YORK (AP) – A widely watched indicator of the economy’s direction rose only slightly in April, giving little sign of a postwar bounce in activity. The New York-based Conference Board said Monday that its Index of Leading Economic Indicators rose by 0.1 point last month to 110.6.
The research institute said the measure was buoyed by the rise of the stock market and consumer expectations, but weakness in the labor market and manufacturing held it down.
The slight rise matched analyst expectations.
The index, which attempts to measure where the economy is headed in the next three to six months, fell 0.2 points in March and 0.5 points in February. The index stood at 100 in 1996, its base year.
“While the economy is growing and not losing momentum, growth is very slow and will be that way for at least a few more months,” Conference Board economist Ken Goldstein said.
“Gross domestic product increased at only a 1.5 percent annualized rate in each of the last two quarters and these current index readings suggest that GDP growth in the second quarter may not be much better than that,” he said.
The coincident index, which measures current economic performance, declined 0.1 point to 114.9 after holding steady in March.
On Wall Street, stocks accelerated their decline after the report was released. In midmorning trading, the Dow Jones industrial average was down 135 points at 8,544, while the Nasdaq composite index was off 27 points at 1,512 and the S&P 500 was 17 points lower at 928.
Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, said the index readings were mostly a reflection of how the economy did during the war against Iraq and was more upbeat about the economic outlook.
“There really hasn’t been enough time after the war to get a clean indicator,” Thayer said.
He noted that interest rates are still very low, a tax cut is coming and a declining dollar is boosting American exports.
“We got a lot of good things happening, it’s just going to take time for it to happen,” Thayer said.
He likened fears about the slow economy to the “doubt phase” of the first week of the war, when “everybody though it would drag on forever.”
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