Philly Fed Expands; Leading Indicators Rise

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A gauge of future U.S. economic activity rose for a third straight month in February, while a separate report showed that U.S. mid-Atlantic factory activity rebounded in March.

The Conference Board said on Thursday that its Leading Economic Index increased 0.5 percent to 94.8 last month after advancing by an upwardly revised 0.5 percent in January, suggesting the recovery is poised for further gains despite tighter fiscal policy in Washington.

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Economists polled by Reuters had expected the index to rise 0.4 percent in February.

"The U.S. economy is growing slowly now, and with this reading increases hope that it may pick up some momentum in the second half of the year," Ken Goldstein, an economist at the Conference Board, said in a statement.

However, Goldstein cautioned that deep government budget cuts which went into effect at the beginning of March had yet to make their impact felt and were not yet reflected in the index.

A separate survey released on Thursday showed that factory activity in the U.S. mid-Atlantic region grew in March after contracting for two months in a row as new orders and employment improved.

The Philadelphia Federal Reserve Bank said its business activity index rose to 2 from minus 12.5 in February, topping economists' expectations for minus 2.

Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

New orders rose to 0.5 from minus 7.8, while the gauge of the number of employees gained to 2.7 from 0.9

The report is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management.