US economic indicators rising as inflation remains subdued

By Frank Fuhrig Feb 17, 2012, 18:51 GMT

Washington - A key gauge of future economic strength rose in January for the fourth straight month as inflation remained modest, according to both private and government reports issued Friday.

The New York-based Conference Board, a private business think tank, said that its index of leading indicators rose 0.4 points in January to 94.9, after increasing 0.5 points in December.

The gain 'reflected fairly widespread strength among its components, pointing to somewhat more positive economic conditions in early 2012,' Conference Board economist Ataman Ozyildirim said.

The improvement reflected strengthening manufacturing along with improving financial and credit conditions, even as consumer outlook remained pessimistic.

The index is compiled from indicators that tend to predict the direction of the economy three to six months into the future. The Conference Board said that economic growth could accelerate in the spring and summer.

The US economic expansion slowed last year to 1.7 per cent from 3 per cent in 2010, though fourth-quarter growth was estimated at an annualized 2.8 per cent.

The consumer price index rose 0.2 per cent last month in the United States, according to the monthly survey by the Bureau of Labour Statistics said.

Inflation was up 2.9 per cent for the 12 months ending in January.

So-called core inflation, excluding volatile food and energy prices, was up 0.2 per cent in January, with the 12-month core rate at 2.3 per cent.

The increase in prices was below Wall Street expectations, according to a Bloomberg News survey of 82 economists. The average January inflation forecast had been 0.3 per cent, within a range of predictions for increases of 0.1 per cent to 0.4 per cent.

The Federal Reserve announced last month that it would keep its benchmark interest rate at 'exceptionally low,' near-zero levels through 2014, amid modest US economic growth and serious risks to the global economy coming from Europe.

Fed chief Ben Bernanke said last week that the central bank foresees continued 'subdued' inflation. Low inflation reduces pressure for the Fed to tighten its monetary policy.

Food prices rose 0.2 per cent in January, pushed by higher restaurant prices even as grocery costs were unchanged. Dairy and meat products were higher, while fresh fruit and vegetables and cereals and baked goods were lower. The 12-month food inflation rate was 4.4 per cent.

Energy prices rose 0.2 per cent in January, with rising petrol and fuel oil prices offset by a 2.9-per-cent drop in natural gas prices. The 12-month inflation rate for energy prices was 6.1 per cent.

Housing costs rose last month at close to the overall consumer price index.