Index of economic indicators up 0.3 percent

AP Business WriterNEW YORK (AP) -- An important gauge of future U.S. economic activity rose 0.3 percent in October, though analysts cautioned it was premature to suggest the slumping economy is poised to rebound.

The Conference Board said Tuesday its Index of Leading Economic Indicators edged up to 109.4 in October, following a 0.5 percent decline in September and a 0.1 percent drop in August.

The index indicates where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

The economic fallout from the Sept. 11 attacks in New York and Washington was responsible for the precipitous decline in September, said Ken Goldstein, economist for the New York-based Conference Board.

But that drop, the largest one-month decrease since January 1996, wouldn't have been as sharp absent the attacks, thereby improving the October reading, he said.

"If (the attacks) make September look worse, it would then follow that they're making October look better than it actually was," he said.

Goldstein said the housing and labor sectors, two components of the index, continued to struggle in October. But that weakness was offset by a recent rise in stock prices and the Federal Reserve's interest rate cutting campaign, he said.

The central bank has cut rates 10 times this year to shore up the economy, and is expected to cut rates again when it meets next month.

But Michael Swanson, senior economist at Wells Fargo & Co. in Minneapolis, downplayed the impact of the Fed's actions.

"We can control monetary policy, but that doesn't necessarily make people feel better off instantaneously," Swanson said. "What we can't control and what people put more value on is employment and factory orders."

In a separate report released earlier Tuesday, the Commerce Department said the U.S. trade deficit narrowed by a record amount in September to $18.7 billion. Although the deficit in manufactured goods rose, it was offset by huge payments by foreign insurance companies due to the attacks.

The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.

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