Tallahassee Journal

Gauge of economy posts slight 0.2% gain

Gauge of economy posts slight 0.2% gain

An index designed to predict the future health of the U.S. economy rose in January by the smallest amount in five months, indicating the economy’s momentum may have slowed a bit. The New York-based Conference Board said Thursday its index of leading indicators increased 0.2% in January, the weakest gain since a 0.1% rise in August. In addition, the December increase was revised lower to a 0.4% rise instead of the initially reported 0.5% increase.635599425510349259-AP-LEADING-INDICATORS-70934268

The pace of growth in the index has moderated in recent months from gains of 0.6% in both September and October to smaller increases since that time. “While the LEI suggests a positive short-term outlook in 2015, the lack of strong momentum in residential construction, along with a weak outlook for new orders in manufacturing, poses a downside risk for the U.S. economy,” said Conference Board economist Ataman Ozyildirim.

Five of the 10 forward-pointing indicators that make up the index made positive contributions in January with the largest boost coming from low interest rates and consumer expectations for business conditions. Four indicators were negative in January with the biggest weakness coming from the new orders index compiled by the Institute for Supply Management and a drop in stock prices.

Overall economic growth slowed to a 2.6% annual rate in the final three months of 2014 after gains of 4.5% in the spring quarter and 5% in the July-September period. Many economists say the economy is growing at a moderate pace of around 2.5% in the current January-March quarter.