U.S. Leading Indicators Fall For Second Month

By John S. McClenahen The Conference Board's index of leading economic indicators for the U.S. fell in July for the second consecutive month. At the very least, this suggests slower growth for the economy during the rest of 2004. Factoring in July's three-tenths of a percentage point decline, the New York-based business research group's leading index now stands at 116.0 (1996=100). Only four of the index's 10 components increased in July. Those advancing were building permits, consumer expectations, average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials. Six elements declined in July: vendor performance, the interest-rate spread, stock prices, initial claims for unemployment insurance, the inflation-adjusted money supply, and manufacturers' new orders for non-defense capital goods. The leading index fell a revised 0.1% in June, a sharp contrast to May's 0.4% increase, the index's most recent rise. "Although it is too soon to conclude that these declines end the upward trend in the leading index underway since March 2003, [the widespread] weakness has slowed the growth rate of the leading index into the range of 1% to 2% (annual rate)," says the Conference Board.

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