Index of economic indicators posts third increase in row, U.S. reports.


May 31, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

The federal government's main forecasting gauge for the economy posted its third monthly increase in a row in April, boosting hopes that an end of the recession could be near.

Statistics released today by the Commerce Department showed an unusually broad-based improvement in the Index of Leading Economic Indicators. The index of 11 key economic statistics rose by 0.6 percent after a revised rise of 0.7 percent in March and a 1.2 percent climb in February.

Meanwhile, state officials report some early, if unsteady, signs of recovery in Maryland's economy. Claims for new jobless benefits peaked in February at about 8,000 a week and are now down to about 3,500, said Ann Franklin, economist with the Department of Fiscal Services, the auditing arm of the General Assembly.

Especially important is the increase in a number of key components of the index, she said. Earlier this year, the improvement had been concentrated in stock prices and consumer confidence -- things that could have been attributed to euphoria after the Persian Gulf war, she said.

"It seems things are turning around. Three solid months of increases are good news," she said.

The Commerce Department said the indicators were led by more manufacturers' orders for consumer goods, and included lower claims for state unemployment insurance benefits, slower vendor deliveries, higher stock prices, a longer work week and increased applications for building permits.

Four indicators were negative, including weaker consumer expectations, lower plant and equipment orders, a smaller backlog of unfilled orders and a bigger money supply.

One indicator -- commodity prices -- was unchanged from March.

Franklin and other economists caution that the data is still incomplete and that a recovery in Maryland could lag behind the nation as a whole. Many jobs in the state are dependent on federal spending -- both defense and civilian -- which is still under pressure from the federal budget crunch.

"I think Maryland will come out similar to the national as a whole, but the recovery will probably not be that strong," Franklin said.

Sales tax receipts, another important gauge of economic activity, have yet to show any improvement in Maryland, she said. For the seventh consecutive month, the receipts were down from year-earlier levels in March, the most recent figures available. The state treasury, suffering from persistent shortfalls, is not likely to see any relief at least until fall, Franklin said.

Gwen Wagner, an economist with T. Rowe Price in Baltimore, said, "I'm still very cautious about the economy. I wouldn't want to read too much into these three numbers."

In a national survey released yesterday, the Mortgage Bankers Association said the Northeast and the South, two regions hard hit by the recession, recorded the biggest increases in mortgage delinquency rates during the first three months of the year.

The survey found the number of Americans behind on their mortgage payments was up by 341,000 in the first quarter when compared to the same period in 1990.

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