Leading indicators fall 0.3 percent in August; show economy already weak before Sept. 11

Monday, September 24th 2001, 12:00 am
By: News On 6

NEW YORK (AP) _ The economy was weakening even before the terrorist attacks in New York and Washington, a new Conference Board survey showed Monday.

The New York-based Conference Board said its Index of Leading Economic Indicators fell 0.3 percent in August to 109.6, following a revised 0.4 percent increase in July.

The index was based on data collected before the Sept. 11 attacks on the World Trade Center and the Pentagon.

``There was cautious optimism a month ago that manufacturing declines might have been bottoming out,'' said Conference Board economist Ken Goldstein. ``Now, in the wake of the attacks, economic demand seems likely to slow.''

The index is usually closely watched because it indicates where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

The report had limited impact on the markets Monday, however, given that the nation's economic outlook has drastically changed since Sept. 11.

In a reversal of last week's plunge, the Dow Jones industrial average was up 258 points to 8,494 in the first hour of trading, while the Nasdaq composite index was up 55 points to 1,478.

Last week, the Dow fell more than 14 percent, suffering its worst point loss ever, as economic and political uncertainty sent stock prices to their lowest levels in three years. The Nasdaq fell more than 16 percent.

Two forecasting groups, Blue Chip Economic Indicators and the National Association for Business Economics, have released surveys after the attacks that said a majority of economists believe a recession is unavoidable.

The board said seven of 10 components of the leading index decreased in August: average weekly manufacturing hours, index of consumer expectations, stock prices, vendor performance, interest rate spread, average weekly initial claims for unemployment insurance and building permits.

Money supply was the only component that rose, while manufacturers' new orders for non-defense capital goods and manufacturers' new orders for consumer goods and materials held steady for the month.

The coincident index, which measures current economic activity, remained unchanged at 116.6. The index of lagging indicators, which reflects changes that have already occurred, dropped 0.3 percent in August to 104.5.

The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.