Originally created 11/04/99

Leading indicators down 0.1 percent in September



NEW YORK (A) -- A key gauge of future economic activity fell slightly in September, but the U.S. economy is expected to remain on track toward the longest expansion in American history, the Conference Board reported today.

The Index of Leading Economic Indicators declined 0.1 percent in September to 107.9 after showing no change at 108.0 the month before, according to revised figures released by the private business-financed study group. The index had increased in the three preceding months.

Analysts had predicted that the index would be unchanged in September.

Ken Goldstein, a Conference Board economist, said the latest report did not signal an end to the business expansion that began in March 1991 and already is the longest peacetime expansion ever. It will become the longest U.S. economic expansion if it continues through February.

"Severe weather conditions and uncertainty over interest rates may help explain why the rise in the indicators was cut short," Goldstein said in a statement. "But without more evidence of some underlying weakening in the economic fundamentals, there remains little reason to expect that this expansion will not set a record in February 2000."

There are concerns, however, that the Federal Reserve could slow down growth by raising interest rates for a third time this year when its policy-makers meet on Nov. 16. The Fed has been concerned that an overheating economy could rekindle inflation.

The leading index is closely watched because it serves as a barometer of turning points in the economy. It is designed to forecast trends up to six months in the future.

The Conference Board said six of the 10 components of the index fell in September, with the greatest drops registered in building permits and manufacturers' new orders of consumer goods.

The group said its index of coincident indicators, which looks at current activity, was down 0.2 percent in September to 125.0 after rising a revised 0.1 percent the month before to 125.2. It was the first decline since April, when it was unchanged, and still suggests that the nation's gross domestic product would expand in the October-December quarter, the Conference Board said.

The index of lagging indicators rose 0.4 percent in September to 109.1 after increasing a revised 0.3 percent the month before to 108.7.