Leading indicators rise 1 percent in December

NEW YORK – A private research group's gauge of future economic activity rose in December, suggesting the economy will strengthen over the next few months.

The Conference Board said Thursday that its index of leading economic indicators rose 1 percent last month after a 1.1 percent increase in November. Those are the biggest increases since March, when the index jumped 1.4 percent.

Economists polled by FactSet had expected a lower reading of 0.6 percent for December.

The measure had stalled this summer as Europe's debt crisis and a weak jobs market hit U.S. stocks. It began accelerating at the end of 2010 as the country's economic condition improved. The stock market has rallied, the manufacturing sector continues to grow and consumers and businesses are spending more.

Six of the measure's 10 components increased last month, while two declined and two were steady. The biggest positive was a jump in December building permits, which suggests home construction will rise, a boon for the country's troubled housing market. The National Association of Realtors said Thursday that home sales rose 12.3 percent in December, the fastest pace in seven months.

Also helping support the leading indicators index was a December rally in stock prices, fewer recently laid off people filing for unemployment benefits and slightly improved consumer confidence. A measure of interest rates that historically has predicted faster economic growth and higher inflation also rose.

Measures related to the manufacturing sector declined last month.

Still, the Conference Board's economists cautioned that the economy still faced big problems in 2011. State governments are cutting spending, hiring is weak and home foreclosures are at record highs.