- The Washington Times - Monday, October 20, 2003

NEW YORK (AP) — The nation’s economy continued to rebound in September, but appeared to slow after rapid growth earlier in the year, according to a closely watched gauge of future business activity.

The Conference Board reported yesterday that its Index of Leading Economic Indicators declined by 0.2 percent in September to 113, slightly below analysts’ expectations. The dip in the September reading marked the first decline in the index since March, and followed a 0.4 percent rise in August.

Analysts said the decline largely reflects the volatility of some components of the index, and that the overall dip points to an economy that is still expanding but not as rapidly.

“The story these leading indicators are telling us is this — that probably the sizzling economic growth that we experienced in the third quarter cannot continue and that it probably has already begun to downshift,” said Sung Won Sohn, chief economist with Wells Fargo & Co. in Minneapolis.

Mr. Sohn said the economy’s recent pace of growth was probably unsustainable. But the leading indicators would have to decline for several consecutive months to merit worry that the economy was losing ground, he said.

“The economy is improving … although the road ahead will likely remain bumpy,” Conference Board economist Ken Goldstein said.

Mr. Goldstein noted that his group’s Coincident Index, which tracks the current economy, showed a small increase in September.

That, along with the recent increases in the leading index are reassuring, he said.

Both measures, he said, “remain on growth paths and so should the overall economy over the next few months.”

The leading index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Four of the 10 components of the leading index rose in September, including average weekly manufacturing hours, stock prices, manufacturers’ new orders for consumer goods, and orders for nondefense capital goods.

But those increases were offset by declines in other components, most noticeably a large drop in the real money supply.

The coincident index, a snapshot of the current economy, rose by 0.1 percent in September, with all four of its indicators increasing.

The lagging index, which tracks the business climate already past, decreased by 0.5 percent.

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