U.S. economy still on a strong growth path, leading indicator find, though dangers lurk

GettyThe surging U.S. economy shows little sign of calming down.

The numbers: The U.S. rolled into the fall on a "strong growth trajectory," though the economy could slow in 2019 if weakness in the housing and stock markets persist, according to an index that measures the nation's economic health.

The leading economic index rose 0.5% in September after 0.4% and 0.7% gains in the prior two months, the Conference Board said Thursday.

What happened: Most of the areas of the economy covered by the report improved in September, with the most notable exception of permits to build new homes. Workers in manufacturing also put in slightly fewer hours.

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The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys. Eight of the 10 components expanded in September.

Read: U.S. job openings hit a record 7.1 million, exceed number of unemployed Americans

Big picture: The leading index is the latest in a slew of economic signposts that show growth remains steady, if perhaps a bit slower than in the spring.

With job openings at a record high and unemployment at a 48-year low, Americans feel secure in their jobs and have money to spend. That will keep the economy growing strongly through at least through the end of the year despite rising U.S. interest rates.

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What they are saying? The leading index "improved further in September, suggesting the U.S. business cycle remains on a strong growth trajectory heading into 2019," said Ataman Ozyildirim, economist at the board.

"However, the LEI's growth has slowed somewhat in recent months, suggesting the economy may be facing capacity constraints and increasingly tight labor markets," he added.

Market reaction: The Dow Jones Industrial Average DJIA, -1.27% and the S&P 500 SPX, -1.44% fell again in Thursday trades. Stocks have struggled for traction after big losses last week.

Meanwhile, the 10-year Treasury note yield TMUBMUSD10Y, -0.26% edged up to 3.21%. Earlier this month the yield reached a seven-year high of 3.23% in anticipation of rising U.S. interest rates.