New York – The U.S. economy should expand modestly in coming months as a healthy job market continues to trump weakness in housing prices, a gauge of future business activity showed on Thursday.
The Conference Board said its Index of Leading Economic Indicators rose a higher-than-expected 0.3 percent in May, boosted by rising stock prices, higher consumer expectations and the availability of jobs.
Economists said that jobs should continue to be plentiful, despite an unexpected surge in jobless claims last week.
The Labor Department reported Thursday that unemployment claims totaled 324,000 last week, up 10,000 from the previous week, to the highest level since mid-April.
While the big increase was unexpected, analysts said it did not change their view that the labor market remains hardy. Even with the increase, analysts noted claims remain close to their average – 319,000 – over the first 5 1/2 months of the year.
While the overall U.S. economy grew at a lackluster 0.6 percent in the first three months of this year, many analysts believe the pace has picked up significantly in the spring.
The Conference Board’s upbeat report shows that the impact of the housing slump has been fairly contained so far, said Patrick Newport, an economist with Global Insight.
“It just hasn’t spilled over to the rest of the economy,” he said.
May’s increase reversed a revised 0.3 percent drop in April, down from the original 0.5 percent decline that economists blamed on soaring gas prices and a drop in building permits.
