Indicators Signal October Slowdown

The government’s chief economic forecasting gauge signaled a slowdown in October, but other evidence suggested that lower interest rates will keep the economy from toppling into a recession.

The 0.4% drop in the Commerce Department’s index of leading economic indicators announced Friday fits in with the consensus among analysts that the final quarter of this year and the first three months of 1990 will see weak growth at best.

“The indicators are telling us what they’ve been telling us for some time, and that is that the economy is continuing to expand, but at a slow rate,” said economist David Berson of the Federal National Mortgage Assn.

Construction activity rose 1% in October, bolstered by the first gain in single-family construction in nine months, the Commerce Department said.

Four of the 11 indicators were positive. Building permits increased 2.8% and the nation’s money supply, reflecting lower interest rates, expanded modestly.