NEW YORK -- Evidence continues to build that the US economy is strengthening -- including on the jobs front.
The Conference Board said yesterday its composite index of leading economic indicators rose 0.5 percent in January to 115.0 following gains of 0.2 percent in December and 0.3 percent in November.
The index is closely watched because it forecasts trends in the economy in the next three to six months.
In Washington, meanwhile, the Labor Department reported that the number of people filing new claims for unemployment benefits fell sharply last week. That offered hope that companies may be feeling better about business conditions and are less inclined to hand out pink slips.
The department said that for the work week ended Feb. 14, new applications filed for jobless benefits plunged by a seasonally adjusted 24,000 to 344,000. It was the largest decline since the beginning of November and left claims at their lowest level since the week ending Jan. 24.
Meanwhile, a nationwide survey showed mortgage rates around the country dropped this week to their lowest levels in seven months.
The average rate on benchmark 30-year mortgages fell to 5.58 percent, down from 5.66 percent last week, Freddie Mac, the mortgage giant, said yesterday in its weekly survey of mortgage rates. This week's rate was the lowest since 5.52 percent for the week ending July 11.
The markets initially rose in response to the economic news, but the gains were wiped out in a late-day sell-off. The Dow Jones industrial average closed down 7.26 to 10,664.73. The Nasdaq Composite index dropped 30.51 to 2,045.96.
Gary R. Thayer, chief economist for A.G. Edwards & Sons Inc. in St. Louis, said the reports were encouraging. "The increase in the leading indicators is a positive sign that there's potentially more growth ahead," he said.
The benefits report, Thayer said, indicates the labor market is firming up a bit.
Job creation has become a hot issue during this election year. The economy has lost 2.2 million jobs since President Bush took office in January 2001. Democrats wanting to win back the White House have sought to highlight the slow job growth under his watch. The business-funded Conference Board, based in New York, said that five of the 10 indicators that make up the leading index contributed to January's gain: consumer expectations, stock prices, average weekly manufacturing hours, vendor performance, and a drop in initial claims for unemployment insurance. Four declined, while manufacturers' new orders for consumer goods and materials were unchanged.
Ken Goldstein, the business group's economist, noted the index has been gaining since last spring. The rise points to "sustained economic growth, perhaps through the first half of this year," he said.
Still, Goldstein warned there were factors that could create bumps for the economy. "Consumer confidence could falter if job and wage growth don't continue to strengthen."