Consumer confidence increases as economy improves

(CBS/AP) WASHINGTON -- A measure of future U.S. economic activity recovered in July following a sharp drop in June, providing further evidence of an economy that is regaining some momentum. The Conference Board said Friday that its index of leading economic indicators increased 0.4 percent in July after falling 0.4 percent in June.

The July strength came from an improvement in a number of components with the largest contributions coming from a big jump in applications for housing permits and declines in applications for unemployment benefits.

The rebound last month put the index at 95.8, matching its May level, which was the highest reading in four years.

Economists viewed the July result as evidence that the economy has regained its footing after a sluggish spring that had raised concerns that the country could be in danger of slipping into another recession.

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"The expansion continues, no double-dip recession, just continued moderate, sub-par growth," said John Silvia, chief economist at Wells Fargo. In a signal of potential economic challenges ahead, manufacturing in the Philadelphia region shrank for the fourth straight month in August, adding to worries that factory output nationwide could slow. The Federal Reserve Bank of Philadelphia said its index of regional manufacturing activity had a reading of -7.1 in August. That's only slightly better than July, when it read -12.9. Any reading below zero indicates contraction.

Silvia said he was looking for economic growth of around 1 percent to 2 percent at an annual rate in the current July-September quarter. The economy slowed to growth at a rate of just 1.5 percent in the April-June quarter after growing at a 2 percent pace in the first three months of this year.

The gain in the leading indicators was the latest report showing an improved outlook. This week, there were reports that factory production increased in July and homebuilders were growing more confidence in the housing recovery. Earlier, the government reported that job growth rose to 163,000 for July, the best showing in five months.

The index of leading indicators is a compilation of 10 forward pointing indicators.

For the six months ending in July, the index has been rising at an annual rate of 2.3 percent, which is an improvement over the 0.6 percent annual rate of growth turned in during the previous six months.