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Indicators point to strength
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October 5, 1999: 11:28 a.m. ET
Leading indicators feel impact of higher interest rates, but economy still on track
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NEW YORK (CNNfn) - The Conference Board's Index of Leading Economic Indicators fell 0.1 percent in August, on target with expectations and still suggesting a strong economy.
The widely watched forecast is meant to predict the economy's direction six months or more in the future. Despite the slight drop to 107.9 percent, the board said the index is still positive and indicates the current economic expansion has enough strength to become the longest on record in February.
The board, a leading not-for-profit source of economic statistics and data, said higher interest rates are starting to be felt in the indicators' components. A drop in housing starts and a slight drop in average work week were among the impacts of the rise in rates. But the board said the economy seems to be able to handle the higher rates.
"Indeed, given the rise in short-term interest rates, one might have expected more of a negative impact in the labor, housing and financial markets," the board said in a statement.
"Clearly, the strength elsewhere in the economy, especially the pickup in manufacturing activity, is enough to allow the expansion to sustain higher rates."
The higher rates are likely to continue to hit some areas, the board said, but not enough to choke off the expansion.
"One consistent pattern throughout this expansion has been the tendency for some sectors to moderate while other sectors of the economy remain quite vibrant," said the board. "Expecting more of the same over the next six months, especially in light of the rate hikes, would certainly be in character."
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