This Week's Economic Roundup
Flagging consumer confidence is taking its toll on the economy, amid faint signs of returning strengths in the housing and job markets. Here's a look at this week's economic developments and how they may impact your business.
Leading Indicators Down
A sharp downturn in consumer expectations dragged down the index of U.S. leading economic indicators by 0.6% in May, the Conference Board reported on Thursday.
Just three of 10 key economic indicators making up the monthly leading index made gains in May, the New York-based research firm said.
While the interest rate spread and manufacturers' orders for capital goods and consumer goods were on the rise in May, consumer expectations, weekly jobless claims, real money supply, average weekly manufacturing hours, building permits, stock prices, and vendor performance all showed declines, the report said.
The leading index has fallen three times in the past four months, dropping by 0.2% over the past six months.
The declines were blamed on rising energy prices and a cooling housing market.
By contrast, the group's coincident index, which gauges current economic activity, rose by 0.2% following similar gains in April and March, the report said. The increases were led by gains in personal income, non-farm payrolls, and manufacturing and trade sales.
Income Growth Slows
Personal income rose by 1.4% in the first three months of year, compared to 1.9% in the previous quarter, the Commerce Department reported on Thursday.
Despite the slowdown, which was attributed to declines in property and rental income -- particularly in regions still recovering from Hurricane Katrina -- personal income grew at a pace equal to the average of the last three years, the report said.
The industries that generated the biggest earnings were health care, professional services, finance, administrative services, and construction, the report said.
Cities in the Southwest, including those in Texas, Oklahoma, New Mexico, and Arizona, saw incomes and earnings grow faster than in any other region, the report said.
Housing Starts Rebound
After three months of declines, new residential construction surged by 5% to 1.96 million in May, the Commerce Department reported on Tuesday.
At the same time, housing permits fell 2.1% from April, and a full 8.5% compared to the same period last year, the report said.
Jobless Claims Rising
New claims for unemployment insurance rose last week to 308,000 from 297,000, the Labor Department reported Thursday.
The four-week average was down 5,000 to 311,250 from the previous week, the department said.
The biggest number of new claims last week were in Pennsylvania, while highest number of claims overall were in Puerto Rico, Alaska, and Michigan, the report said.