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A closely watched gauge of future economic activity fell in June for the first time in more than a year, adding to re-emerging concerns about the strength of the U.S. economic recovery.

The Conference Board's index of leading economic indicators fell 0.2% last month, its first decline since March 2003. The index increased 0.4% in May and 0.1% in April.

The Conference Board, a business group that also produces a monthly survey measuring consumer confidence, said five of the LEI's 10 categories fell while another five, including stock prices, rose. (Given the recent swoon, its unlikely that stock prices will repeat that performance in July.)

The report also said the decline in one category -- the average manufacturing workweek -- was most likely the result of many businesses being closed for former President Reagan's funeral.

The funeral also has been cited as a contributing factor to slower-than-expected job creation in June, which was one of the first major economic reports to breed concerns about the economy.

Durable goods orders, though prone to volatility, also have slumped lately, falling sharply in both April and May. June figures are due out July 28. The red-hot housing market has also cooled, as mortgage interest rates rose in anticipation of a

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tightening. Retail sales fell 1.1% in June.

"While the leading index is still on an upward trend, its growth rate has slowed in recent months, into the 2.5% to 3.5% range (annual rate)," the report said. "The current behavior of the leading index is consistent with real GDP increasing at a 4% to 5% annual rate in the near term."

The government reports its first reading of second-quarter growth July 30. Economists expect GDP to come close to matching its 3.9% annualized growth rate in the first quarter. The pace of growth has slowed in the past two quarters.

In his twice-annual economic testimony to Congress earlier this week, Fed chairman Alan Greenspan said the central bank had tweaked its projections for growth, saying it now expects the economy to expand 4.5% to 4.75% from the final quarter of 2003 to the final quarter of 2004. In February, it forecast growth of between 4.5% and 5%. The Fed expects the expansion to slow to 3.5% to 4% in 2005.

Economists -- the Fed boss included -- have debated whether the June slowdown is the beginning of a trend or just a one-month exception, or what some are calling an economic speed bump on the road to sustained growth. The majority view favors the latter interpretation, but a spate of new economic data in the next two weeks -- including the July jobs report -- will give economists a better idea.