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KNOXVILLE, Tenn. — The Tennessee economy is poised for continued expansion into summer, the University of Tennessee’s monthly index of leading indicators shows.

The state index for the last two months of 1995 improved substantially, mainly because of a healthy labor picture.

Matt Murray, the economist who compiles the index for the UT-Knoxville Center for Business and Economic Research, said Tuesday that non-agricultural employment rose 3.6 percent in December’s index to its highest level of the year.

“As we closed out 1995, there were concerns that the economy nationwide and in Tennessee was beginning to slump, but the fact is Tennessee had more jobs at the end of the year than it had at the beginning of the year,” Murray said.

“The state has continued to create jobs in the services and trade sectors, even as the manufacturing sector contracts a bit. It’s that overall jobs growth that’s helping sustain economic activity in Tennessee.”

Taxable sales increased sharply in December, suggesting a stronger Christmas buying season than previously thought.

“If consumers were not optimistic about the future, I don’t think we’d see them going out and spending as they did during the Christmas season,” Murray said. “It was not a disastrous Christmas buying season here in Tennessee. It was not spectacular either, but a very solid Christmas year.”

Other positive components in the December index were a sharp drop in unemployment benefit claims and an upturn in the U.S. index for December.

On the downside, Murray said, there were December declines in Tennessee construction contracts and mortgages.

Contact: Matt Murray (423-974-5441)