A key barometer of future economic conditions picked up steam in September, The Conference Board reported this week.

The U.S. leading index increased 0.3 percent last month to 137.9, with seven of 10 indicators advancing. Although building permits and interest-rate spread continued to drag the index, improving vendor performance, fewer jobless claims and rising stock prices all pushed the index higher in September. As a result, the leading index is now at the same level as in March 2007.

The Conference Board reported that the leading index has been essentially flat throughout 2007, and the six-month diffusion index suggests that the strengths among the leading indicators continue to be only slightly more widespread than weaknesses in recent months. At the same time, real GDP, which measures the total value of goods and services produced by the United States in a given period, grew at a 2.2 percent average annual rate in the first half of the year, only slightly up from the 1.6 percent average rate in the second half of 2006. The current behavior of the composite indexes suggests that slow economic growth is likely to continue in the near term.

The coincident index, The Conference Board’s gauge of the current state of the economy, increased again in September, growing 1 percent from March (a 1.9 percent annual rate). This, however, is below its long-term average growth rate (about a 2.6 percent annual rate measured over 1959-2007), and down from the 2.5 percent average annual rate in 2006.

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