Further evidence that the U.S. economy is cooling came Thursday in the form of a widely watched indicator of future economic activity.
The Conference Board, a private research group, said its Leading Economic Indicator index fell 0.1 percent in July, while the coincident index increased 0.2 percent and the lagging index decreased 0.1 percent.
The leading index now stands at 138.1, just below is year-high of 139.1 hit in January. The index has decreased in four of the last six months, and the behavior of the index suggests that slow to moderate economic growth should continue in the second half of the year.
From January to July, the leading index fell by 0.7 percent, but it is still 0.9 percent above its July 2005 level. In addition, weaknesses and strengths among the leading indicators have become roughly balanced in recent months, the Conference Board said.
Five of the ten indicators that make up the leading index increased in July. The positive contributors - beginning with the largest positive contributor - were average weekly manufacturing hours, vendor performance, stock prices, index of consumer expectations, and manufacturers' new orders for consumer goods and materials. The negative contributors were building permits, average weekly initial claims for unemployment insurance, interest rate spread, manufacturers' new orders for nondefense capital goods, and real money supply.
The coincident index increased again in July. This measure of current economic activity has been increasing steadily since September 2005, but its growth moderated slightly in the second quarter of 2006 and in July. From January to July, the coincident index grew 1.1 percent, and employment and industrial production continued to be the major contributors to this growth.
All four indicators that make up the coincident index increased in July. The positive contributors to the index - beginning with the largest positive contributor - were industrial production, employees on nonagricultural payrolls, manufacturing and trade sales, and personal income less transfer payments.
Also, manufacturing activity in the Philadelphia region jumped in August, according to the Federal Reserve Bank of Philadelphia.
The Philly Fed said its business conditions index, a gauge of the health of the region's manufacturing sector, moved to 18.5 in August versus the 6.0 reading seen in July and better than what economists had been forecasting.
The new orders index rose to 15.7 from July's 10.1 and the prices paid index came in at 45.3, down from July's 50.3. Prices received held at 17.1.
''Indicators of current activity point to a rebound from the slower growth reported in July,'' the report said. ''Indicators for general activity, new orders, shipments, and the average workweek were all higher this month,'' even as executives were less optimistic about the future path of activity.
The employment index fell to 8.2 from 12.8 the prior month.Finally, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits fell last week by the largest amount in a month, with 312,000 workers applying for jobless benefits, down by 10,000 from the previous week.