Gauge of US economy increases 0.5 per cent in December, fourth straight solid gain

WASHINGTON – An index designed to predict the future health of the U.S. economy posted a fourth straight solid gain in December.

The Conference Board said Friday that its index of leading indicators increased 0.5 per cent in December after a revised gain of 0.4 per cent in November. The index also posted solid gains in September and October after a flat reading in August.

The December increase reflected widespread strength with eight of the 10 forward-pointing indicators that make up the index showing strength.

“The short-term outlook is getting brighter and the economy continues to build momentum,” said Ataman Ozyildirim, a Conference Board economist. “Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern.”

The largest positive contributors to the index were the spread in interest rates, a fall in weekly unemployment claims, consumer expectations and new orders to manufacturers for capital goods excluding aircraft.

The only negative contributor to the index in December was a drop in building permits. Average weekly manufacturing hours held steady, meaning it did not add or subtract from the overall index reading.

The economy grew by 5 per cent in the July-September quarter last year, the fastest pace in more than a decade. Economists expect that growth in the final three months was probably around 3 per cent and they are looking for growth to continue at a 3 per cent pace in 2015. If that forecast occurs, it would be the strongest annual economic growth since 2005.