US indicators point to signs of recovery

       A measure of the US economys prospects scaled a 11-year high in August but a record rise in home loan defaults cast doubts on the durability of the apparent recovery from recession.
       The Conference Board said on Monday its index of leading economic indicators rose 0.6% to 102.5, the highest level since January 2008. It had advanced 0.9% in July.
       It was the fifth straight month that the gauge, which is supposed to forecast economic trends six to nine months ahead, had increased.
       The gain was a touch below the 0.7%rise economists had forecast. The index has risen 4.4% during the past six months.
       The indicators are designed to project economic activity in the next three to six months.
       These data add further evidence to the growing view and our long-held belief that the official end date of the recession is likely to be sometime in the third quarter, said Michelle Girard, an economist at RBS in Greenwich, Connecticut.
       However, separate monthly data from credit bureau Equifax Inc showed a record 7.58% of US homeowners with mortgages were at least 30 days late on payments in August, up from 7.32% in July.
       US financial markets were mute to the data and analysts said investors were awaiting the outcome of the Federal Reserves two-day policy meeting on Tuesday and Wednesday.
       The Fed is expected to leave benchmark overnight lending rates unchanged near zero, but the statement accompanying the rate decision will be scrutinised for clues as to when the US central bank will start withdrawing some of the support it is lending to the economy.
       While economists agree the United States is starting to emerge from its worst recession since the 1930s with a solid rebound seen in the third quarter there are concerns that stubbornly high unemployment could undermine the recovery.
       The unemployment rate raced to a 26-year high of 9.7% last month and is expected to peak just above 10% early next year.
       A restocking of inventories, which were drawn down to record lows to adjust to sluggish demand, and government programmes including incentives for firsttime homebuyers and some motor vehicle buyers, are expected to drive growth in the third quarter.
       In August, the US economys prospects were lifted by rising supplier deliveries,stock market prices, building permits and consumer expectations, according to the Conference Board, a private sector research group.
       Analysts said separate indexes in the report also offered some encouragement.The coincident economic index was unchanged at 99.8 in August, while the lagging index slipped 0.1% to 110.2 pushing up the so-called coincidentto-lagging ratio for a fifth straight month.
       The coincident-to-lagging ratio, which tends to trough and turn up well before the official ending of recessions, has a good track record of foreshadowing an economic recovery, according to economists.
       This continues to suggest strongly that this recession is over. But whether or not the economy can keep grinding forward and at what speed is still a big question mark, said Jennifer Lee, an economist at BMO Capital Markets in Toronto.
       Real money supply, average weekly initial claims for unemployment insurance and manufacturers new orders for non defence capital goods were a drag on the main leading index in August.Weekly manufacturing hours and manufacturers new orders for consumer goods and materials were steady.
       Our view is that its not a sustainable (recovery) because thats a lot of special factors ... By the end of the year we should see slower momentum, said Brian Bethune, US economist with IHS Global Insight in Waltham, Massachusetts.