The index of U.S. leading economic indicators rose 0.4 percent in January, extending its upward trend for a fourth month. Friday's data points to continued growth in the U.S. economy, supported by an increase in the average workweek and improving financial indicators.

The Conference Board said its leading index rose 0.4 percent last month after a revised 0.5 percent gain in December. Economists polled by Thomson Reuters called for a slightly bigger increase of 0.5 percent.

This fourth consecutive gain in the LEI reflected fairly widespread strength among its components, pointing to somewhat more positive economic conditions in early 2012, said Ataman Ozyildirim, economist at the Conference Board.

The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs.

Among the 10 indicators that make up the LEI, seven made positive contributions in January.

The average workweek component posted a strong 0.2 percent contribution to the overall index, while initial jobless claims subtracted 0.03 percent.

With the strong start to equity markets in January, the stock prices component added modestly to the index. Meanwhile, the interest rate spread also provided a boost to the headline number.

There were three negative contributors, led by consumer expectations for business and economic conditions.

The coincident economic index increased 0.2 percent, suggesting that current conditions continue to improve, but at a slower rate than the 0.3 percent increase in December.

The modest gains in the LEI over the past few months suggest that economic growth will continue at a moderate pace, which supports our view for ongoing sub-par economic growth over the first half of the year, John Silvia, chief economist at Wells Fargo Securities LLC, said in a Friday research note.