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Key index sees shaky growth

Job market seems to buoy economy amid housing, factory slump

Workers unload roof tiles recently at a KB Home development in Gilbert, Ariz. The Conference Board yesterday said that in February, fewer home builders obtained permission to build houses. (Matt York/Associated Press)

NEW YORK -- A strong job market appears to be propping up an economy suffering from slumping home prices and a slowdown in manufacturing, two economic reports suggested yesterday.

Industry research group The Conference Board said yesterday that its composite index of leading indicators, which is meant to project changes in the economy six to nine months in advance, slipped 0.5 percent to 137.3 in February after a revised 0.3 percent decline to 138 in January. The drop in February, while expected, was the steepest since February 2006.

Meanwhile, the Labor Department said yesterday that jobless claims dropped last week for the third consecutive time, signaling that the labor market is not seriously weakening although the overall economy is slowing.

The Labor Department reported the number of applications for jobless benefits totaled 316,000 last week, a decline of 4,000 from the previous week.

Conference Board labor economist Ken Goldstein said in a statement that the drop in leading indicators suggests "moderate but choppy" economic growth. But the economy's saving grace is the consumer, who has been resilient despite swings in gas prices and cooling home values, he added.

Michael Gregory, senior economist at BMO Nesbitt Burns, said job growth in sectors such as healthcare, education, and leisure has spurred consumer spending and confidence.

In February, more people filed for unemployment insurance, fewer home builders obtained permission to build houses, and consumers adopted a more tempered outlook on the economy's future, the Conference Board said.