US Leading Indicators Predict Continued Growth

THE government's chief economic forecasting gauge rose 0.7 percent in December, suggesting continued economic expansion this year after a temporary pause.

The United States Commerce Department said yesterday its Index of Leading Economic Indicators now has risen for five straight months, including 0.5 percent advances in both October and November. The cumulative increase for the five months was 2.5 percent, the largest since a 6 percent rise over seven months in 1983.

Three straight moves by the index in a single direction are considered a good gauge of where the economy will be moving in the next six to nine months.

After expanding at a torrid 5.9 percent annual rate in the final three months of 1993, many analysts had expected economic growth to slow because that rate of growth was not sustainable. They now say growth will be further curbed in January by the effects of severe winter weather and the California earthquake.

``But that shouldn't take away from the fact that the economy seems on much more solid footing now,'' than it was early in 1993, says Laurence Meyer, head of a St. Louis economic forecasting service.

In Germany, economists are hoping that the central council of the Bundesbank will cut its key interest rates at a regular meeting today. They say they are cautiously optimistic that in light of ``encouraging'' inflation figures, and despite ``unfavorable'' growth of the money supply, the bank will opt for an easing of rates.

Provisional figures show that prices rose by 3.4 percent in western Germany in the 12 months ending in January. This was better than expected, and the argument that inflation was too high to permit a cut in rates is now out of the way, says economist Stefan Riecke of BHF bank.

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