Key economic indicator falls a fourth consecutive month
By Associated Press
Published October 22, 2004
NEW YORK - A closely watched barometer of future economic activity fell in September for the fourth straight month, suggesting that the recovery might be cooling. A separate report from the Labor Department, however, suggested modest improvement in the job market.
The Conference Board, a private research group in New York, said Thursday its Index of Leading Economic Indicators fell 0.1 percent last month, following declines of 0.3 percent each in August and July and 0.1 percent in June.
The index is a composite of economic measures such as manufacturing and interest rates, and is considered a good indicator of where the economy is headed over the next three to six months.
Ken Goldstein, an economist for the Conference Board, said the fourth straight decline in the index was "a clear signal that the economy is losing momentum." After growing at an annual pace of nearly 4 percent in the third quarter, the economy is likely to expand at a slower pace in the fourth quarter of this year and the first quarter of next year, he said.
Goldstein and other economists said the wave of hurricanes that hit Florida in September and soaring energy prices might have held back some key sectors in the economy, such as home building. Despite the latest setback, however, the Conference Board said the moves in the index did not signal a downturn or an end to the expansion.
The decline in the index was slightly less than the decline of 0.2 percent that some analysts expected. The 10-year Treasury bond, which tends to rise on indications that the economy is cooling, edged up 1/16 point to yield 3.98 percent, down from 3.99 percent Wednesday. Stock market indicators were mixed.
Jose Rascal, an economist with Merrill Lynch, said the latest decline in the index showed that the economy "faces some weakness" going forward in the next few months, especially with the prospect of higher home heating costs as winter approaches, which could cut into consumer's holiday season spending.
"You're looking at an economy that has begun to slow meaningfully," Rascal said. "Now the big question going forward is what effect energy prices will have on the economy in the fourth quarter."
On the job front, the Labor Department reported Thursday that initial claims for unemployment benefits fell by a seasonally adjusted 25,000 to 329,000, the lowest level since early September. Claims had risen by 16,000 in the previous week.
