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Leading indicators rise
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December 19, 2001: 11:26 a.m. ET
Closely watched economic gauge rises higher-than-expected 0.5% in November.
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NEW YORK (CNN/Money) - A closely watched gauge of future economic activity rose higher than expected Wednesday, marking the second consecutive increase for the index and fueling hope for a recovery in the first half of 2002.
The Index of Leading Economic Indicators rose 0.5 percent in November, according to the Conference Board, a New York-based research group that compiles the figure. That's ahead of expectations of a 0.3 percent gain, according to analysts surveyed by Briefing.com. October's increase was revised to 0.1 percent from 0.3 percent.
"Should this pattern in the leading index continue, an economic recovery in the first half of next year may be possible," the board said in its statement Wednesday.
Gains in the financial, housing and expectations components led the increase for the second consecutive month, the Conference Board said.
The report comes on the heels of the Federal Reserve's 11th interest rate cut this year, a record for the Fed as it tries to stanch an economic slide marked by hundreds of thousands of corporate layoffs, sluggish consumer spending and weak corporate profits.
Maureen Allyn, chief economist at Zurich Scudder Investments, agrees a recovery could lie just around the corner.
"I think there's lots of reason to suspect that you might see a recovery in the first half," Allyn said. "First of all, we've had policy makers throw everything but the kitchen sink at the economy this time, so it should begin to bear fruit.
However, the report noted that industrial production continued to decline and unemployment continued to rise.
Six of the 10 indicators that make up the leading index increased in November, including weekly initial jobless claims, interest rate spread, stock prices, building permits, money supply and the index of consumer expectations.
Manufacturing indicators posted declines for the month.
Separately Wednesday, the Commerce Department said the U.S. trade deficit rose sharply in October, due largely to a sharp drop in foreign insurance payments as claim activity returned to normal in the month after the Sept. 11 attacks on the United States.
The trade gap increased by $10.4 billion in October to $29.4 billion after plummeting in September to $19.0 billion.
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The October trade gap reflected an $11.0 billion month-to-month increase in imports of goods and services to $106.8 billion. That included $10.5 billion that mostly reflected a return to the normal relationship between premiums paid to foreign insurers and claims received, Commerce said.
In comparison, imports of other goods and services were little changed from the previous month, reflecting the sluggish U.S. economic picture.
U.S. exports in October totaled $77.3 billion, up only $500 million from the depressed September level as overseas demand also remained weak. 
from staff and wire reports
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