The U.S. economy continued to show improvement in January, albeit sluggish, the Conference Board reported today.

The U.S. leading index, a key barometer of future economic conditions, edged up 0.1 percent last month to 138.5. Based on revised data, the index gained 0.6 percent in December but lost 0.1 percent in November.

The leading index is still slightly below its most recent high in January 2006 and it has been flat to declining in seven of the last 12 months, but its six-month growth rate has picked up in the last two months. At the same time, real GDP growth picked up to a 3.5 percent annual rate in the fourth quarter of 2006, according to advance estimates, following a 2 percent rate in the third quarter of 2006.

From July to January, the leading index rose 0.7 percent (a 1.5 percent annual rate), and the strengths and weaknesses among its components have been roughly balanced.

In January, large positive contributions from money supply and consumer expectations were offset by negative contributions from average weekly hours in manufacturing and building permits.

The coincident index, a gauge of current economic activity, increased again in January. From July to January, the index grew 0.9 percent (a 1.8 percent annual rate), and it is 1.8 percent above its January 2006 level.

The Conference Board said that “the recent behavior of the leading index still suggests that slow to moderate economic growth is likely to continue in the near term.”

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