Slower economic growth likely

June 03, 1994|By New York Times News Service

WASHINGTON -- Signs that the pace of economic growth may slow in the months ahead spread yesterday when the government said its main forecasting index was unchanged in April.

The reading followed a March gain as large as any since Bill Clinton's inauguration as president.

A separate Commerce Department report showed the nation's factories obtaining slightly fewer orders in April, an indication of diminished prospects for what has been a vigorous industrial sector.

Still other official figures found first-time claims for unemployment benefits rising on a four-week average to the highest levels in over a year, when weather-induced layoffs in February are disregarded.

"Growth is shifting toward a more moderate pace," said Gary E. Schlossberg, senior economist at the Wells Fargo Bank. Adding to signs of an economic slowing, the government said earlier this week that new-home sales and consumer spending slumped in April.

Many analysts expect the economy's growth rate to slip under 3 percent during the second half, roughly in line with a pace deemed sustainable over the long run and far below the 7 percent surge in the final months of 1993.

The new data are making those forecasts seem more secure and therefore ease concerns that inflation will be rising significantly by the end of the year. Last week the government estimated growth for the January-March period at 3 percent.

Yesterday's reports indicating a weaker economy gave a little support to inflation-sensitive bond prices, but the rally was restrained as traders and analysts awaited today's government data on employment conditions for May.

The rise in payroll employment is expected to approach 300,000, but this includes 70,000 truck drivers who had been on strike in April.

The unchanged reading for the index of leading indicators, designed to predict turns in the economy by six to nine months, was the second in the latest three months, with an intervening rise of 0.7 percent for March.

Five of the index's 11 components were weaker in April, and five were stronger. The other component, the length of the average workweek, was unchanged.

A companion index made up of items that tend to move at the same time as the overall economy, rather than ahead of it, rose 0.2 percent in April, the smallest of three straight advances. This so-called coincident index now stands 3.6 percent ahead of its April 1993 level.

The department's index of lagging components rose 0.2 percent in April after two straight declines.

The Commerce Department's other report yesterday -- on manufacturers' orders, shipments and inventories for April -- showed new orders eased $300 million, or 0.1 percent, to $274.4 billion. The durable goods portion, estimated preliminarily last week to have risen 0.1 percent, was revised yesterday to show a decline of that amount.

Shipments of factory goods eased 0.3 percent, yesterday's report also showed, while unfilled orders rose 0.2 percent.

The Labor Department's weekly report of initial claims for jobless benefits registered a 4,000 decline, to 362,000, last week, while the four-week moving average climbed 2,000, to 369,000.

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