US economy shows signs of slowing down

WASHINGTON: A weakening US housing market and a steady flow of Americans seeking jobless benefits will help lead to a slowed economy over the coming months, data released on Thursday showed.

A key gauge of future economic activity fell unexpectedly for the fourth time this year amid signs of a stalling housing market, according to a report released on Thursday by the New York-based Conference Board, a private research group.

The so-called US index of Leading Indicators declined 0.1% in July to 138.1 after inching up 0.1% a month earlier, according to the Conference Board. Wall Street economists were expecting the index to advance by a modest 0.1%.
“The lagged effects of the Fed’s rate hike campaign has decisively impacted the leading economic indicators,” said analysts at IDEAGlobal in New York.

US Treasury and stock markets showed little reaction to the data.“The economy is cooling but it isn’t likely to stall out,” said the Conference Board’s labour economist Ken Goldstein. “The cooling off in the housing market has been more pronounced, however, and is one factor in the softer domestic pace of economic activity.”

Meanwhile, the coincident index — a measure of current economic activity — rose 0.2% last month, building on a 0.2% gain a month earlier. So far this year, this index has logged monthly gains.

The leading index measures a basket of economic indicators ranging from unemployment benefit claims to building permits and is intended to forecast economic trends up to six months ahead.

According to the Conference Board, half of the 10 indicators that make up the leading index increased in July, but it was mainly a decline in building permits and a steady number of weekly claims for jobless benefits that drove down the index.

Release of the Conference Board’s latest data came after the Labor Department reported earlier on Thursday that the number of workers seeking first-time jobless aid fell by 10,000 last week to a seasonally adjusted 312,000, signalling a relatively stable job market.

While the latest weekly measure of jobless claims decreased, new claims have generally been fluctuating in a narrow range from 297,000 to 322,000 after spiking earlier last month during the automobile industry’s annual summer shutdown.

“I don’t think that firms necessarily are hiring a huge number of workers. We should not extrapolate these low claim numbers to mean that payrolls are going to surge. Fewer firings do not mean more hirings,” said Anthony Chan, chief economist at JP Morgan Private Client Services in New York .

The four-week moving average of initial jobless claims, considered a more reliable barometer of employment conditions because it irons out weekly fluctuations, rose to 311,250 in the August 12 week from a revised 309,500.

On Wednesday, Dallas Federal Reserve Bank president Richard Fisher said the US appeared to be near full employment, though he noted that concept has become harder to measure in a more global economy where jobs and production can shift from country to country. “We have been running a significantly employed economy,” Fisher told a Dallas real estate group, adding: “I’m not sure what ‘full employment’ is, in a globalised world.”