Posted on: Friday, December 19, 2003

3 reports indicate economy expanding

By Courtney Schlisserman, Joe Richter and Carlos Torres
Bloomberg News Service

The U.S. economy is enjoying a burst of energy heading into the new year, three reports released yesterday show.

A gauge of Philadelphia-area manufacturing soared to the highest in a decade, the index of leading economic indicators rose, and jobless claims last week matched an almost three-year low.

The Federal Reserve Bank of Philadelphia's measure of manufacturing rose to 32.1 this month from November's 25.9. The New York-based Conference Board's leading index increased 0.3 percent in November, the sixth rise in the last seven months.

Also, initial claims for state unemployment insurance dropped by 22,000 to 353,000 last week, the Labor Department said.

"The economy has a pretty full head of steam going into 2004," said Peter Hooper, chief U.S. economist at Deutsche Bank Securities in New York.

Best Buy Co. and Agilent Technologies Inc. are among companies hiring as the economy is forecast to grow about 4.4 percent next year, a percentage point faster than the average of the 10-year economic expansion that began in 1991.

The decline in claims in the week that the government conducts a monthly survey of employers suggests the economy this month added more than the 57,000 jobs gained in November, economists said.

"We will be getting up into the 200,000 area in payrolls, if not in December, then certainly by early next year," Hooper said.

The December jobs report is to be released Jan. 9.

The Philadelphia Fed's report showed more factories in December hired workers than at any time since April 1973.

The region comprises Delaware, eastern Pennsylvania and southern New Jersey. Economists and investors watch the report for clues about the performance of nationwide manufacturing, which accounts for one-seventh of the economy. The overall index was the highest since December 1993.

Six of the 10 indicators the Conference Board uses to derive the leading indicators index contributed to the rise.

In addition to fewer jobless claims, rising consumer confidence and an increase in factory hours boosted the reading.