A closely watched gauge of future US economic activity fell in September for the fourth straight month after a stronger pace earlier in the year, a private research firm said on Thursday.
The Conference Board said its index of leading indicators fell 0.1 percent in September to 115.6, slightly stronger than the Wall Street forecast of a 0.2 percent decline. The indicator fell 0.3 percent in August.
The drop was driven by negative readings in vendor performance, the interest rate yield curve, average weekly initial claims for unemployment insurance and average weekly manufacturing hours.
"A fourth consecutive decline ... is a clear signal that the economy is losing momentum heading into 2005," said Conference Board economist Ken Goldstein.
High energy prices and the hurricane season contributed to the decline in economic activity, he added. Goldstein warned that if consumers become more cautious and concerned over the weak job growth, then the economy could slow before the holiday season and cause weaker gross domestic product growth in the fourth quarter and the first quarter of 2005.
Ian Shepherdson of High Frequency Economics said, "The index has fallen at a 0.3 percent annualised pace over the past six months, the worst performance since (the) period immediately before the war in Iraq."
"Overall, weak and worse to come," Shepherdson said.
However, Anthony Chan, chief economist at Banc One Investment Advisors, said the numbers signal positive times ahead, especially in conjunction with Thursday's report on a larger-than-expected 25,000 drop in jobless claims reported by the US Labour Department.
"It's encouraging," Chan said. After the uncertainty of the elections and an eventual lowering of energy prices, consumer confidence will grow, he added. He expects "jobless claims and consumer goods orders to start to reverse course and put the leading indicators back in positive territory."
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