Plus: Leading Economic Indicators Improve and Jobless Claims Fall.

Obama and Hu Stress U.S.-China Economic Cooperation
In a high-profile trip to the United States last week, Chinese President Hu Jintao met with President Barack Obama to discuss U.S.-China trade relations and other economic issues. The meetings resulted in a renewed emphasis on improving economic cooperation between the two nations, beginning with a new series of contracts with U.S. firms.

President Obama used the Chinese leader’s visit as an opportunity to announce several major export deals totaling roughly $45 billion, including China’s purchase of 200 Boeing airplanes valued at $19 billion and 70 additional contracts worth $25 billion with U.S. manufacturers in 12 states. According to the White House, these deals focus on “sectors ranging from auto parts to agriculture, machinery to chemicals” and are expected to support 235,000 U.S. jobs.

“The deals appeared at least partly intended to answer U.S. criticism that China does not play by the rules as it amasses economic power and uses a number of policies to maintain a large trade surplus with the United States,” Reuters reports. “Although China is one of the fastest-growing export markets for the United States, that is overshadowed by imports from China that reached an estimated $370 billion in 2010.”

China will take further measures to improve intellectual property rights enforcement in an effort to crack down on counterfeit products. It also plans to expand government procurement policies, securing better access for U.S. companies to Chinese government contracts, which are currently valued at $80 billion annually. Obama addressed concerns over Chinese currency policy, as well, claiming that China undervalues the yuan, giving its industries an unfair advantage.

“Economic ties, long seen as a source of stability in the often rocky U.S.-China relationship, have caused friction in recent years,” the Associated Press explains. “U.S. manufacturers assert that China undervalues its currency by as much as 40 percent, making its exports cheaper at the expense of those from the United States, contributing to high U.S. unemployment.”

Leading Economic Indicators Up in December
The Conference Board’s leading economic index (LEI) — a forward-looking gauge of U.S. business activity — improved in December, rising 1 percent to 112.4 following a 1.1 percent gain in November and a 0.4 percent increase in October. The December results, released last week, indicate that U.S. economic growth is gathering momentum after some mixed results earlier last year.

“While the LEI points to an economic expansion that is gaining further traction, its components still suggest the expansion path may be uneven,” Ataman Ozyildirim, an economist for The Conference Board, said in an announcement of the findings. “The large increases in December and November show that, after a brief pause in the second quarter of 2010, the LEI is resuming the upward trend that began in March 2009.”

Six of the 10 indicators tracked in the LEI improved last month, led by housing permits, the interest rate spread, average weekly initial claims for unemployment-insurance benefits and consumer expectations.

The Conference Board’s coincident economic index — a measure of current business activity through payrolls, incomes, sales and production — increased 0.2 percent in December, rising to 101.9, following a 0.1 percent increase in November and a 0.2 percent rise in October. Meanwhile, the lagging indicators index, which is based on business lending, unemployment, service prices and other factors, increased 0.3 percent in December.

“Household spending this year will climb 3 percent, the most since 2005, according to the median forecast of economists surveyed this month,” Bloomberg News reports. “The pickup in consumer spending complements factory growth that helped bring the economy out of the worst recession since the 1930s. Also boosting manufacturing, exports rose in November to the highest level since August 2008…”

Jobless Claims Down
New initial jobless claims fell sharply in the latest week reported, offsetting earlier losses and signaling a strengthening labor market. According to the U.S. Department of Labor, seasonally adjusted unemployment claims decreased by 37,000 for the week ending Jan. 15, bringing the total to 404,000, down from the previous week’s revised figure of 441,000. The four-week moving average fell by 4,000 to 411,750.

The latest improvements in the labor market helped compensate for earlier increases in jobless claims, as new claims rose by a combined 50,000 in the first two weeks of January despite dropping to a 2-and-a-half year low of 391,000 in late December.

“Labor officials attributed the prior spike in claims to a backlog that built up over the holidays,” MarketWatch explains. “State unemployment offices were open fewer hours and poor winter weather deterred some people from filing applications right away. As the backlog was processed claims were expected to recede.”

Although the decline in jobless claims has boosted the prospects for a stronger recovery in employment conditions, many economists estimate that claims have to remain below 400,000 on a sustained basis to indicate healthy job growth.

“While the stream of layoffs is slowing, economic growth hasn’t sped up enough to spur robust hiring,” the Wall Street Journal reports. “Stronger job gains are necessary for consistent declines in the unemployment rate.” However, “[f]aster growth may be getting closer.”