Top Economic Index Down 0.2% in April : Forecast: Second loss in four months as leading economic indicators point to sluggishness.

The government’s main economic forecasting gauge slipped 0.2% in April, its second loss in four months and another indication of the nation’s sluggish economy, the Commerce Department said today.

The index of leading economic indicators, designed to forecast economic activity six to nine months in advance, had risen 1% in March to regain February’s 1% loss. The index was unchanged in January.

A slight increase in the average workweek caused the department to revise the March figure up from 0.9%.

Analysts had said in advance of the report that the economy started the second quarter at the same weak pace that it ran in the first quarter and would improve only slightly in the second half of the year.

The economy grew at a 1.3% annual rate in the first quarter and many economists expect it to advance only 2% for the entire year, down from 3% last year and 4.4% in 1988.

Bush Administration and congressional budget negotiators had their eyes on the report since continued growth would be required for any reduction in the federal deficit.

A recession would mean a loss of jobs and lower personal incomes, diminished corporate profits and thus a drop in tax revenues. At the same time, the government would be called on to spend more on benefits.

Analysts had expected a slight dip in today’s leading indicators report, in part because of a continuing decline in the number of building permits in April. Permits have fallen each month since January, when builders sought to take advantage of record warm weather and to beat a deadline for meeting expensive new building standards.

Many analysts foresee no immediate improvement in the construction industry in view of high interest rates and tighter restrictions on credit.

In addition to building permits, five more of the 11 forward-looking statistics were negative.

They included a drop in new plant and equipment orders, a decline in the average workweek, a decrease in orders for consumer goods, a drop in manufacturers’ unfilled orders and an increase in weekly unemployment claims. Four of the components were positive: an increase in the price of raw materials, an index measuring consumer confidence, slower business delivery times and an increase in the money supply.

Stock prices were unchanged.

Economists Bruce Steinberg and Laurie Allen contended in advance of today’s report that “the latest batch of indicators provide further evidence of a lackluster economy.”

Writing in Merrill Lynch Capital Markets’ “Weekly Economic & Financial Commentary,” they pointed to reports last week showing continued sluggishness in the automobile industry and flat orders since the first of the year for durable goods--usually expensive products expected to last at least three years.

“Like other indicators released during the past month, the latest set of data probably understate economic momentum,” they added. “But they amply illustrate that the economy is going nowhere fast.”