Leading Indicators Take Steepest Fall in 19 Months : Economy: Biggest contributor was the drop in raw material prices. No recessionary signs are seen.

The government’s main economic forecasting gauge took its sharpest drop in 19 months in February, the Commerce Department said Wednesday, pointing to slower growth.

The index of leading indicators fell 0.2% in February, continuing a pattern of weakness that began last fall. It was its sharpest monthly decline since a matching 0.2% drop in July, 1993, and the biggest fall since a 0.4% slide in May of that year. The index had been flat in January after rising 0.2% in December. “The signs point to slower growth and moderation of inflation pressures,” said economist Carl Palash of MCM MoneyWatch in New York City. “There are no signs of a recession.”

The index is designed to help predict activity six to nine months ahead. Three straight moves by the index in the same direction are considered a good indication of where the economy is headed.

The price of stocks was one of only three of the gauge’s 11 components that advanced in February and the main reason the index did not fall further.

In another report, the Commerce Department said wholesale inventories increased 1.2% in February and were up 1.5% in January. The January figure was revised upward from the original estimate of 0.6%. Analysts said higher inventories could lead to a cutback in production but do not portend a severe economic decline.

“We’re well shy of falling into the warning stage of a recession,” said economist Michael Moran of Daiwa Securities America Inc. of New York. The indicators are “not close to signaling that.”

The Federal Reserve Board is credited with helping engineer the slowdown by raising interest rates seven times since February, 1994.

The economy grew 4.1% in 1994, its best showing in a decade, and closed out the year by advancing at a booming 5.1% annual rate in the fourth quarter.

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Index of Leading Indicators

Seasonally adjusted figures.

Feb. 1995: 102.5

Source: Commerce Department