Economy to slow, data suggest

A gauge of future economic activity suggested that the U.S. economy will slow in coming months, reversing recent gains and indicating that higher gasoline prices and a sluggish construction industry are beginning to take their toll.

The Conference Board said Thursday that its index of leading economic indicators dropped 0.5% in April, greater than the 0.1% decline analysts had been expecting. The reading is designed to forecast economic activity in the U.S. over the next three to six months.

The decline almost canceled out a revised 0.6% rise in March, and analysts said it should relieve pressure on the Federal Reserve to raise interest rates.

“The data may be pointing to slower economic conditions this summer,” said Ken Goldstein, a Conference Board labor economist.

The reading tracks 10 economic indicators. Two of those readings were positive in April: stock prices and real money supply. The negative contributors, beginning with the largest, were building permits, weekly unemployment claims, manufacturers’ new orders for non-defense capital goods, consumer expectations, vendor performance, average weekly manufacturing hours and interest rate spread.

With the latest decline, the cumulative drop in the index over the last six months is 0.2%.