WASHINGTON – A measure of the U.S. economy’s health improved in October, suggesting consumers and businesses mostly shrugged off the 16-day partial government shutdown.
The Conference Board said Wednesday that its index of leading indicators rose 0.2 per cent in October to a reading of 97.5. It was the sixth gain in seven months and followed large gains in the previous two months.
The index is designed to signal economic conditions over the next three to six months.
Kathy Bostjancic, an economist with the Conference Board, said the recent gains point to stronger growth next year. The Conference Board forecasts that the economy will grow 2.3 per cent in 2014, up from the anticipated 1.6 per cent growth for this year.
The index is comprised of indicators, most of which have already been released individually. Seven of the 10 indicators showed positive readings in October. Low interest rates and a rise in applications for building permits were the strongest.
The October index was held back by a slump in consumer confidence and rise in weekly unemployment benefit applications.
The Labor Department has said that unemployment benefit applications fell last month because of unusual circumstances: the partial government shutdown temporarily laid off some workers, and backlogs in California distorted claims for the nation’s largest state.
Unemployment benefit applications have since fallen back to pre-recession levels. On Thursday, Labor said applications dropped 10,000 last week to a seasonally adjusted 316,000, a two-month low.
Cooper Howes, an economist at Barclays, said consumer confidence should also improve as the impact of the government shutdown fades.
The University of Michigan’s index of consumer sentiment increased to a final reading of 75.1 for November, up from the preliminary reading of 72.0.