Gauge of economic activity up 0.4 pct. in January

By: The Associated Press | Times-Dispatch
Published: February 18, 2012

A gauge of future economic activity rose in January for the fourth straight month, adding to evidence that the economy has strengthened in the new year.

The Conference Board said Friday that its index of leading economic indicators rose 0.4 percent in January. The increase pushed the index to its highest point since July 2008.

The measure of leading indicators is designed to anticipate economic conditions three to six months out. Its steady rise has coincided with other positive data that suggest the recovery is picking up.

"Recent data reflect an economy that started the year on a positive note," said Ken Goldstein, an economist at the Conference Board.

The unemployment rate fell to 8.3 percent, the lowest in nearly three years, after employers added 243,000 net jobs — the most in nine months. Auto sales are up, unemployment aid applications are down, and factories are cranking out goods at a healthy pace.

Seven of the 10 indicators measured by the Conference Board increased in January, led by strength in the spread between short-term and long-term interest rates. Three indicators held the index back. The largest negative was a drop in consumer expectations.

Goldstein said a separate index that tracks indicators tied to the current health of the economy had shown some strengthening in the October-December period and in January.

The seven indicators that strengthened were the spread in interest rates, average factory hours worked per week, stock prices, a credit index, building permits, and two measures for manufactured goods.

Meanwhile, consumer prices rose modestly in January on higher costs for food, gas, rent and clothing.

Economists said inflation likely will ease in the coming months as prices for raw materials level off.

The consumer price index increased 0.2 percent last month after a flat reading in December, the Labor Department said Friday.

Excluding volatile food and energy, so-called core prices ticked up 0.2 percent. A big reason for the increase was that clothing prices jumped 0.9 percent. Medical care, rent and tobacco prices also increased.

Car prices were unchanged, and airfares fell.

Core inflation over the past 12 months moved up to 2.3 percent — its highest point in more than three years. A steady rise in core prices could limit the Federal Reserve's ability to take steps to boost the economy.