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Business Title: Leading Indicators in U.S. Increase for Third Month Oct. 21 (Bloomberg) -- The index of U.S. leading indicators rose in September for the third straight month, signaling the recovery will extend into 2011. The 0.3 percent increase in the New York-based Conference Board’s gauge of the outlook for the next three to six months matched the median forecast of 57 economists surveyed by Bloomberg News. Another report showed the number of claims for jobless benefits fell last week to a level consistent with little improvement in the labor market. Gains in consumer spending, business investment and exports may keep the world’s largest economy afloat even as housing remains depressed. At the same time, growth will probably not be strong enough to reduce unemployment, underscoring why some Federal Reserve policy makers have said additional stimulus may be needed. “We’re clearly on an expansion path,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “But we’re still short of a normal recovery. The economy is not growing fast enough to put all those millions of unemployed people back to work.” Manufacturing in the Philadelphia Fed region expanded this month for the first time since July as factory payrolls grew, a report from the branch of the central bank also showed today. The general economic index rose to 1 from minus 0.7 in September. Figures greater than zero signal growth. Fewer Claims Claims for unemployment insurance benefits declined by 23,000 to 452,000 in the week ended Oct. 15, Labor Department figures showed today. The prior week’s figures were revised up by 13,000, to the highest level since late August. The pace of firings has been little changed since the start of the year, indicating unemployment will be slow to recede. A Fed report yesterday showed the economy is growing at a “modest pace” with companies still hesitant to hire, a reason central bankers may ease monetary policy. Stocks held earlier gains after the reports. The Standard & Poor’s 500 Index rose 0.5 percent to 1,183.6 at 10:04 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 2.51 percent from 2.48 percent late yesterday. Estimates for the leading index in the Bloomberg survey ranged from gains of 0.1 percent to 0.6 percent. The Conference Board revised the gain in August down to 0.1 percent from its 0.3 percent previous estimate. Fewer Claims Five of the 10 indicators in the leading index contributed to the increase, led by the interest-rate spread between the overnight federal funds rate and the yield on the 10-year Treasury note. Equity gains also propelled the gauge and continue to signal sustained growth. The Standard & Poor’s 500 index has climbed 3.2 percent in the first 20 days of this month on growing speculation the Fed will pump more cash into the economy to spur the recovery, a tactic known as quantitative easing. “There would appear -- all else being equal -- to be a case for further action,” Fed Chairman Ben S. Bernanke said in an Oct. 15 speech. The recovery is likely to be “fairly modest in the near term,” and “the preconditions for a pickup in growth next year remain in place,” he said. Declining Components Three of the index components retreated, led by a measure of supplier deliveries that signaled orders cooled. The Thomson Reuters/University of Michigan index of consumer expectations which fell to 60.9, the lowest since March 2009, subtracted 0.06 points from the gauge. Building permits dropped in September to the lowest level in more than a year. The Conference Board’s index of coincident indicators, a gauge of current economic activity, was unchanged in September for a second month. The gauge tracks payrolls, incomes, sales and production -- the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions. The gauge of lagging indicators increased 0.4 percent last month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit. Component Breakdown Seven of the 10 indicators that make up the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. The Conference Board estimates new orders for consumer goods, bookings for capital goods and the money supply adjusted for inflation. CSX Corp., the second-largest publicly traded U.S. railroad, last week said third-quarter profit increased 43 percent, topping analysts’ estimates, as rising automotive shipments boosted rail volumes. Except for housing, “we’re seeing things continue their gradual recovery,” Chief Executive Officer Michael Ward said in an interview on Oct. 13. The economy isn’t creating enough jobs to cut unemployment, which is hovering near 10 percent. President Barack Obama and the Democrats are confronted with voter anger over the state of the economy less than two weeks before the congressional election. An Oct. 7-10 Bloomberg National Poll shows almost two-thirds of voters believe the country is on the wrong track and unemployment is the top concern for about half the electorate.
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