Oct. 20, 2005--With a pair of Gulf Coast storms driving energy costs up and consumer confidence down, the index of leading economic indicators dropped last month by the biggest decline since March, the Conference Board said Thursday.
New-home construction and permits for new building last month were also up, the Commerce Department said Wednesday. And the Federal Reserve's so-called beige book survey, also released Wednesday, described economic growth across the country as "moderate or gradual," citing increased hiring and wages, among other upbeat conditions.
The beige book's rosier outlook echoed that of small business owners, who reported continued job increases and capital outlays last month despite the storms, a National Federation of Independent Business survey showed last week: "The back-to-back hurricanes that slammed into states on the Gulf of Mexico left massive damage in their wake, but barely scratched the nation's overall small-business sector," according to the NFIB.
By contrast, the leading index of economic indicators, which gauges the expected performance of the economy in coming months, fell by 0.7% in September, after dropping just 0.1% the previous month, the Conference Board said.
The leading index is calculated from ten key economic indicators, including jobless claims, consumer expectations, the yield curve, building permits, stock prices, supplier deliver times and factory hours. All but three are known before the report is released. The board estimates figures for new orders for consumer goods, non-defense capital goods and the money supply.
Also down, by 0.1%. was the coincident index, a measure of economic activity tracked by payrolls, incomes, sales, and production. The index of lagging indicators, which gauges business lending, length of employment, services prices, labor costs, inventories, and consumer credit, was up 0.2% after remaining unchanged in August.
"The impact of the hurricanes reinforced an already existing moderation in the leading index," the board reported. Though too soon to tell, it added, the index pointed to economic growth slowing over the near term.
The overall declines, the first three-month slide since 2001, were blamed on a spike in first-time jobless claims and lower consumer expectations.
The number of jobless claims, which has reached 2.89 million since Katrina slammed into the Gulf Coast on Aug. 29, its highest point in a year, is already showing signs of leveling off, the Labor Department reported Thursday.
About 35,000 fewer claims were made last week, the department said, dropping total first-time claims to just 355,000 from 390,000 the previous week. Some 40,000 were attributed to the storms, bringing the total number of storm-related claims since Sept. 3 to about 478,000.
The four-week moving average, which evens out week-to-week swings, also dropped to 376,000 from 396,000, the second straight week of declines, the department said.