US leading economic indicators warrant 'cautious optimism' - group

26 January 2012 17:11  [Source: ICIS news]

WASHINGTON (ICIS)--A key indicator of US economic activity rose in December, the Conference Board said on Thursday, noting that the modest year-end improvement combined with other recent gains provide reason for cautious optimism.

The Conference Board, a 95-year-old business analysis group based in New York City, said its leading economic index (LEI) rose by 0.4% in December to 94.3 and followed a 0.2% gain in November and October’s 0.6% advance.

The LEI represents a cumulative measure of 11 different business and economic gauges, such as manufacturers’ new orders, residential building permits, interest rates and consumer sentiment, among others.

The index has been on a modest but nonetheless upward trend over the last year, the board noted.

Board economist Atama Ozyildirim said the December increase in the index “was widespread among the leading indicators, suggesting that economic conditions should improve in early 2012”.

Ken Goldstein, also a board economist, said the index and other recent economic data “reflect an economy that ended 2011 on a positive note, and the LEI provides some reason for cautious optimism in the first half of 2012”.

However, as many other US economists have noted, Goldstein said US economic fortunes going forward could be negatively affected by the ongoing sovereign debt crisis in the eurozone and the developing European recession.

“This somewhat positive outlook for a strengthening US domestic economy would seem to be at odds with a global economy that is losing some steam,” Goldstein said.

“Looking ahead, the big question remains whether cooling conditions elsewhere will limit domestic growth or, conversely, growth in the US will lend some economic support to the rest of the globe,” he said.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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