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Obscure Signs of Good News

The Baltic Dry Index, formerly known at the Baltic Freight Index, has some good news for investors. It's going up.

This index, which measures the activity of the carriers of dry bulk goods around the world, is not high on the list of headline economic indicators. It is not the Conference Board's index of consumer confidence, which surged to 81 in April, from 61.4 in March, nor the manufacturing index of the Institute for Supply Management, which will be released on Thursday, or the monthly employment report, which comes out on Friday.

While the jump in consumer confidence is a plus, it may just be a result of the successful end of the war in Iraq. So the two other indicators will be looked at closely for signs of a rebound in the economy that would keep consumers feeling more positive.

But the Baltic Dry Index and some other lesser-watched economic barometers are already sending positive signals about the global economy -- and were doing so even before the war in Iraq was over and some forecasters were worrying about another economic downturn. Among the other positive indicators is the the Journal of Commerce-Economic Cycle Research Institute index of 18 industrial commodities, whose performance is providing a reading on the strength of global manufacturing.

After a sharp dip in January during the run-up to the war in Iraq, the Baltic Dry Index has climbed almost steadily, showing that the trading of goods has not faltered. This index had fallen sharply in 2001, following the path of the recession, and it stabilized in early 2002 and then began to climb last fall.

The Journal of Commerce-Economic Cycle Research Institute index of industrial commodities has fallen for the the last two months. But a closer look shows that this overall decline is almost all a result of the fall in crude oil prices since the war in Iraq began.

While oil prices, based on a smoothed moving average over the last 250 days, are down 7.7 percent, the prices of textiles in the index are up 6.7 percent, the prices of industrial metals are up 5.8 percent and the prices of miscellaneous goods, including building materials, are up 4.1 percent, according to Lakshman Achuthan, a managing director at the Economic Cycle Research Institute.

"These are good indicators of economic activity," Mr. Achuthan said. "While they are not booming, they are not contracting."

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