BUSINESS

Gauge of US economy posts slight 0.2 per cent gain in January, smallest increase in 5 months

02/19/2015 10:19 EST | Updated 04/21/2015 05:59 EDT
WASHINGTON - 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 per cent in January, the weakest gain since a 0.1 per cent rise in August. In addition, the December increase was revised lower to a 0.4 per cent rise instead of the initially reported 0.5 per cent increase.

The pace of growth in the index has moderated in recent months from gains of 0.6 per cent 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 per cent annual rate in the final three months of 2014 after gains of 4.5 per cent in the spring quarter and 5 per cent in the July-September period. Many economists say the economy is growing at a moderate pace of around 2.5 per cent in the current January-March quarter.