NEW YORK (AP) -- A gauge of future economic activity dropped in June, the second decline in past 3 months, suggesting the economic recovery will weaken.
The Conference Board, a private research group, said Thursday its index of leading economic indicators fell 0.2 percent last month. Economists polled by Thomson Reuters had expected a drop of 0.3 percent.
The leading indicators gauge had risen almost every month since April 2009 as the economy rebounded from recession. It was pulled higher by the increasing amount of money in the economy, the rebound in manufacturing and slow improvements in the job market.
But weakness in the housing sector, faltering consumer spending and high unemployment have raised fears about a big slowdown in growth.
The index was revised higher to a 0.5 percent increase in May from the initial report of a 0.4 percent gain. The April report was revised to a 0.1 percent drop from a prior estimate of no change.
"The indicators point to slower growth through the fall," said Conference Board economist Ken Goldstein. He said the manufacturing rebound will likely slow and there is "little indication" of a pickup in the service sector, which employs about 80 percent of the U.S. work force.
Still, the indicators aren't yet predicting that the economy will fall back into a "double-dip" recession, said John Silvia, chief economist at Wells Fargo.
Five of the 10 indicators increased, while 4 declined and an estimate of manufacturers' new orders for capital goods was flat.
Employment data -- fewer hours worked in factories and more people filing for jobless aid -- weighed down the index, as did dropping stock prices.
The biggest positive contributions were the money supply, which increased, and the difference between 10-year interest rates and the overnight interest rate that the Federal Reserve has kept at a record low near zero. A wide gap between the two can mean investors expect economic activity to pick up.
That gap is still wide by historical levels, but it has narrowed recently as investors searching for safety bought up 10-year Treasurys, driving the bond yield to its lowest level in more than a year.