Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 3, 1994 TAG: 9402030095
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
"These statistics suggest that when the economists came out and looked at the numbers, they saw springtime," said Robert Dederick of the Northern Trust Co. in Chicago. "We aren't going to hit a brick wall, weather permitting." The reports came on Groundhog Day.
The Commerce Department said its Index of Leading Economic Indicators rose for the fifth straight month, including a 0.7 percent advance in December.
The cumulative increase for the five months was 2.5 percent, the best showing since a 6 percent rise over seven months in 1983, when the nation was emerging from its worst slump since the Great Depression.
Three straight moves by the index in one direction are considered a good, though not foolproof, sign of where the economy will be moving in the next six to nine months.
While the latest index figures matched economists' projections, the figures for new-home sales exceeded most forecasts.
The departments of Commerce and Housing and Urban Development said sales of new homes shot up 9.7 percent in 1993 and ended the year by jumping 11.4 percent in December to a seasonally adjusted annual rate of 862,000. That was the best monthly showing since an 880,000 rate in March 1986.
Yearly sales totaled 669,000, highest since 676,000 in 1988.
Eight of the Commerce Department's forward-looking indicators rose in December, two fell, and one was unchanged.
"It is particularly gratifying that the largest component of the index was a surge in consumer expectations," said Commerce Secretary Ron Brown. "Consumer optimism is beginning to grow once again."
Other components that led the advance included an increase in raw material prices, suggesting stronger demand; a decline in weekly initial claims for unemployment insurance; an increase in applications for building permits; an uptick in orders for consumer goods; slower business delivery times, a sign of increased orders; an increase in the inflation-adjusted backlog of orders at factories for durable goods; and rising stock prices.
The only drags on the index were a decline in orders and contracts for new business equipment and plants, and a decrease in the money supply. The average work week was unchanged.
The various changes left the index at a seasonally adjusted 100.3, up 1.1 percent from a year ago and 1.4 percent from just three months ago.
by CNB