In this July 3, 2014 photo, construction worker Vinny Chase climbs out of a pit during a sewer and water line project in Philadelphia. The Conference Board reports on its index of leading economic indicators for June on Friday, July 18, 2014. (AP Photo/Matt Rourke)
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WASHINGTON (AP) — A gauge designed to predict the economy's future health increased in June for a fifth consecutive month, supporting the view that economic growth should accelerate in the second half of this year.
The Conference Board said Friday its index of leading indicators rose 0.3 percent last month. That was slightly lower than forecast but the May increase was revised up to a 0.7 percent gain, a bit stronger than first estimated.
The economy shrank sharply in the first three months of the year, reflecting the effects of a harsh winter, but economists say a rebound began in the April-June quarter and will strengthen in the second half of this year.
Conference Board economist Ken Goldstein said that stronger consumer demand driven by sustained job gains remained "the main source of improvement for the U.S. economy."
The unemployment rate fell to a nearly six-year low of 6.1 percent in June as employers added 288,000 new jobs, marking the fifth straight monthly gain above 200,000. That is the best stretch of job growth since the tech boom of the late 1990s.
A second report Friday showed that the University of Michigan's measure of consumer confidence dipped slightly in July to a preliminary reading of 81.3, down from 82.5 in June.
Paul Diggle, U.S. economist at Capital Economics, attributed the small decline to higher gasoline prices which he said offset the strong gains recorded in the stock market and solid growth in employment.
The leading economic index is composed of 10 forward-pointing indicators. For June, six of the 10 indicators showed gains with the positive contributions including interest rates, credit availability and stock prices. The biggest drag on the index was a fall in applications for permits to build new homes and apartments.
Conference Board analysts said that the weakness in housing represented some risk to the outlook for stronger growth but they predict ted this would be offset by continued favorable conditions in the labor market.
Many economists believe that the economy, after shrinking at an annual rate of 2.9 percent in the January-March quarter, rebound to growth close to 3 percent in the April-June quarter and will strengthen further in the second half of 2014.
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