WASHINGTON – A measure of future U.S. economic activity fell in April after six months of increases. The drop reflected fewer requests for building permits and a temporary spike in applications for unemployment benefits.
The Conference Board said Thursday that its index of leading economic indicators declined 0.1 percent in April from March.
The index now stands at 95.5. That's down slightly from a March reading of 95.6, which had been the highest level since mid-2008. Before the recession began in December 2007, the index routinely topped 100.
"The indicators reflect an economy that's still struggling to gain momentum. Growth is slow, but choppy, consumers, executives and investors are looking for more progress," said Conference Board economist Ken Goldstein.
The weakness in April came mostly from a drop in applications for building permits for homes and an increase in the number of people applying for unemployment benefits. Other components of the leading index showed strength.
Applications for benefits surged in April to a five-month high of 392,000. They have fallen back since then. Last week, unemployment aid applications stayed at a seasonally adjusted 370,000. The four-week average, a less volatile measure, fell from roughly 380,000 to 375,000.
When applications drop below 375,000 a week, it generally suggests hiring is strong enough to lower the unemployment rate.
Jennifer Lee, senior economist at BMO Capital Markets, said that the small dip in the leading index was not a signal that the recovery was in danger.
Builders requested fewer permits in April, the Commerce Department said earlier this week. But the drop was entirely because of a decline in permits for apartments, which shift sharply from month to month. Requests for permits to build single-family homes increased.
Economists tend to pay more attention to single-family home construction because it makes up 70 percent of the market and is less volatile than apartment construction. Single-family home construction is now 39 percent higher than its recession low.
The index, which tracks 10 components, is designed to anticipate economic conditions three to six months out. Most of the data have been previously released in separate reports.
In addition to weakness from unemployment claims and building permits, the other components that acted as a drag on the index were stock prices and consumer expectations. The average workweek, the consumer goods orders and the new orders index were among the components showing strength.