WASHINGTON - A measure of future U.S. economic activity recovered in July following a sharp drop in June, providing further evidence of an economy that is regaining some momentum.
The Conference Board said Friday that its index of leading economic indicators increased 0.4 per cent in July after falling 0.4 per cent in June.
The July strength came from an improvement in a number of components with the largest contributions coming from a big jump in applications for housing permits and declines in applications for unemployment benefits.
The rebound last month put the index at 95.8, matching its May level, which had been the highest reading in four years.
Economists viewed the July result as evidence that the economy has regained its footing after a sluggish spring that had raised concerns that the country could be in danger of slipping into another recession.
"The expansion continues, no double-dip recession, just continued moderate, sub-par growth," said John Silvia, chief economist at Wells Fargo.
He said he was looking for economic growth of around 1 per cent to 2 per cent at an annual rate in the current July-September quarter. The economy slowed to growth at a rate of just 1.5 per cent in the April-June quarter after growing at a 2 per cent pace in the first three months of this year.
The gain in the leading indicators was the latest report showing an improved outlook. This week, there were reports that factory production increased in July and homebuilders were growing more confidence in the housing recovery. Earlier, the government reported that job growth rose to 163,000 for July, the best showing in five months.
The index of leading indicators is a compilation of 10 forward pointing indicators.
For the six months ending in July, the index has been rising at an annual rate of 2.3 per cent which is an improvement over the 0.6 per cent annual rate of growth turned in during the previous six months.