NEW YORK – An indicator of future economic activity inched higher in October, a private research group said Monday, suggesting that recent weakness in the housing market hasn't been severe enough to offset lower gas prices and a rising stock market.
The Conference Board, an industry-backed research group based in New York, said its Index of Leading Economic Indicators rose 0.2 percent last month. The increase came in shy of analysts' consensus forecast for a rise of 0.3 percent.
The index stood at 138.3 versus 139.1 in January — its peak so far this year.
The index is designed to predict economic activity in the three to six months ahead. October's modest increase fit with economists' view that growth is moderating. The index fell in both July and August before edging modestly higher in September. It has been down four of the last seven months.
"The index has basically been about as flat as pancake for the last year, and we see that as sort of consistent with our view of the slowing economy," said David Wyss, chief economist with Standard & Poor's.
Six of the 10 indicators that make up the index rose in October — led by an increase in real money supply and improved consumer expectations — but a sharp decline in housing permits and weaker vendor performance partially offset those gains.
The housing sector has been a major sore spot for the economy in recent months. The latest evidence came Friday when a report of October building permits showed the slowest pace of annual growth in nine years. Housing construction plummeted as builders tried to curb swelling inventories of unsold new and existing homes.
"Economic weakness is skewed toward housing and motor vehicles," said John Lonski, chief economist of Moody's Investor Service.
"The economy is growing more slowly, but we have yet to have weakness spread beyond housing and motor vehicles to such a degree that we need to fear the proximity of a hard landing," Lonski added, referring to when the economy turns from growth to a recession.
In another sign of moderating economic growth, the Federal Reserve held its benchmark interest rate steady last month at 5.25 percent for the third straight session. The Fed had raised interest rates 17 times beginning in June 2004 to stave off inflation, before halting its campaign of credit-tightening in August.
In the Conference Board report, labor economist Ken Goldstein said the October index suggests "the economy is unlikely either to reheat or to get significantly cooler."
"Instead, the kind of slow growth now being experienced could continue right through the winter and into the spring."