Path: utzoo!utgpu!watserv1!maytag!looking!clarinews From: clarinews@clarinet.com (ELLEN WULFHORST, UPI Business Writer) Newsgroups: clari.biz.economy,clari.news.aviation,clari.biz.mergers,clari.biz.top Subject: The Week in Business Keywords: domestic economy, economy, corporate news, corporate finance, air transport, transportation, corporate mergers Message-ID: Date: 2 Feb 90 19:37:15 GMT Lines: 96 Approved: clarinews@clarinet.com ACategory: financial Slugword: review Priority: major Format: week-end ANPA: Wc: 586; Id: f1451; Sel: nf--f; Adate: 2-2-220ped; Ver: sked; Ref: 2takes Codes: &fedexx., yfcnexx., ybtaexx., yfcgexx. NEW YORK (UPI) -- The Commerce Department reported this week that the index of leading indicators, a set of 11 economic measures used to forecast economic activity, rose a strong 0.8 percent in December. This sharp rise, after a mere 0.1 percent gain in November and a drop of 0.3 percent in October, led analysts to say the economy may emerge from its sluggishness without falling into a recession. The report, released Wednesday, was the strongest since April, when the index also climbed 0.8 percent. However, the National Association of Purchasing Management said Thursday that U.S. economic growth continued to decline in January for the ninth straight month and at the greatest rate of decline since December 1982. The Purchasing Managers' Index fell in January to 45.2 percent, down from 46.7 percent in December. A reading below 50 generally indicates the manufacturing segment of the economy is experiencing a decline in growth. A reading above 50 usually indicates that the manufacturing portion of the economy is expanding. The association also revised the index for December down to 46.7 percent, from the 48 percent reported in January to take into account seasonal adjustment factors used by the Department of Commerce. On Friday, the government said demand for airplanes, ships and military tanks sent factory orders up 1.9 percent in December for a second monthly rebound after a disappointing October. The $4.5 billion surge to $244.2 billion followed a 2.4 percent increase in November and a 0.1 percent drop in October, the Commerce Department said. Factory orders finished 1989 at $2.8 trillion, 6.4 percent ahead of 1988. Analysts said the data was another indication that economy is not sliding into a recession, and that the increase suggests the possibility of a steadier pattern of activity in the industrial sector, which has been weakening for the past several months. Also Friday, the government reported January's mild weather boosted construction employment to offset jobs lost at temporarily idled auto plants, keeping the month's civilian unemployment rate unchanged since June at 5.3 percent. The Labor Department's Bureau of Labor Statistics reported that 6.5 million Americans were unemployed last month. The bureau commissioner said the January's unemployment report reflects slow but consistent job growth and stable unemployment in the labor market. The nation's retailers Thursday reported brisk January sales gains spurred by markdowns that captivated bargain-conscious shoppers. Throughout the industry, sales gains at stores that were open one year earlier, known as same- or comparable-store sales and considered by analysts to be the best indication of performance, were better than expected, analysts said. The nation's largest retailer, Chicago-based Sears, Roebuck & Co., said same-store sales were up 3.3 percent, while No. 2 K mart Corp. of Troy, Mich., said same-store sales rose 3.1 percent. Fast-growing Wal-Mart Stores Inc. of Bentonville, Ark., posted a comparable-store gain in January of 10 percent. On Wall Street, John J. Phelan Jr. announced Thursday he is resigning as chairman and chief executive officer of the New York Stock Exchange at the end of the year. Phelan, who has headed the exchange for six years, ruled out taking a government post at this time, quashing to rumors that had swept the financial markets for two days that he would replace U.S. Treasury Secretary Nicholas Brady. No successor was named, and the board appointed a transition committee to make recommendations to the board this fall. As chairman, Phelan saw the market through the insider trading scandals that shook Wall Street in the late 1980s and through its biggest loss ever when the Dow Jones industrial average plummeted 508 points Oct. 19, 1987. Phelan said he did not have any specific plans, but said he hopes there will be ``another career out there for me.'' The stock market was up sharply at midday Friday in active trading, as bargain hunting after January's sharp declines and computerized program buying boosted prices. Stocks closed mixed in quiet trading Thursday, with the blue chips pressured by profit taking after a 47-point rally Wednesday. It was the market's biggest rally since its surge to record highs Jan. 2. Stocks closed lower Tuesday and closed broadly lower Monday in moderate trading. Before computerized buying kicked in, the Dow industrials were down about 25 points, led by a slump in takeover-related issues. Analysts blamed the selloff in so-called ``deal'' stocks on severe weakness in the junk-bond market. The bonds of RJR Holdings Capital, issued to finance last year's $25 billion leveraged buyout of RJR Nabisco, the largest ever, were down sharply after Moody's Investors Service Friday downgraded the bonds. On the oil market, the government reported Thursday that the difference between the price refineries paid for crude oil and the amount they charged for heating oil made from crude, soared fourfold during the recent December freeze. But the Energy Information Administration in its report to Congress noted it was ``too early to translate these (margins) into profits.'' The EIA report was made in response to congressional concerns and Northeast governors' questions of how much profits rose and who profitted from the near-record December cold snap and rise in consumer heating oil prices. It noted that margins do not account for refining, distribution, transportation, storage and other costs, nor reflect the actual volume of product sold.