Ahead of the Bell: Leading economic indicators

NEW YORK — Analysts expect a private sector group's forecast of economic activity rose for the sixth straight month in September, a sign the economy will keep growing next year.

The Conference Board's index of leading economic indicators likely rose 0.8 percent last month, according to Wall Street economists surveyed by Thomson Reuters. The index, which is meant to project economic activity in the next three to six months, climbed 0.6 percent in August.

The Conference Board forecasts economic activity by measuring current jobless aid claims, stock prices, consumer expectations, building permits for private homes, the money supply and other data.

The September report is scheduled for release Thursday at 10 a.m. EDT.

An accompanying index meant to measure the current state of the business cycle was flat in August. The July reading was revised up to a 0.1 percent gain from zero, making it the first increase in nine months.

That index has bottomed in the same month as the U.S. economy for six out of the past seven recessions, according to Wells Fargo Securities.

Most economists think the economy grew around 3 percent in the third quarter. The government reports on third-quarter gross domestic product next week.

The question now is if that pace of growth can continue into the new year as unemployment rises and consumers remain hesitant to spend.

A rebound in the housing sector and manufacturing is helping drive economic activity higher, the Federal Reserve reported Wednesday.

The manufacturing sector has gotten a big boost from government stimulus programs and demand from emerging markets. For example, mining and construction equipment giant Caterpillar Inc. said this week that while overall sales dropped 44 percent in the third quarter, deliveries rose in China. Caterpillar, which generates nearly 70 percent of its sales overseas, said it was seeing "encouraging signs" of a recovery.

But growth in manufacturing won't add jobs in the U.S. That comes from the service sector, which is reliant on consumer spending. In its latest snapshot of the American economy, the Fed said shoppers were holding onto their money amid rising unemployment, stagnant incomes and tight credit.

Meanwhile, housing industry groups have expressed concern that the expiration of a tax credit for home buyers at the end of November could cause the fledging housing recovery to draw back.

The government said earlier this week that applications for home building permits, a key gauge of future construction, fell in September by the largest amount in five months. A rebound in housing is needed to support a broader economic recovery.

And the government expects joblessness, now at 9.8 percent, to keep rising. Even if companies feel more comfortable about the economy, they may be hesitant to hire before demand for their goods and services improves significantly. Meanwhile, big mergers have led to more layoffs.

On Tuesday, server and software maker Sun Microsystems Inc. said it planned to cut 3,000 jobs as it waits for approval from European regulators for a takeover by Oracle Corp.

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