A Mixed Picture of Economy

The economy showed conflicting signs of growth Thursday. Although a closely watched gauge of future business activity fell for the fourth month in a row in April, the number of people signing up for unemployment insurance dropped sharply last week.

The Conference Board said its composite index of leading economic indicators fell 0.2% last month to 114.5 although economists pegged the economy as still solid. The decline was in line with what analysts expected for the index, which is closely followed because it is meant to forecast the economy’s health over the next three to six months.

The April drop followed a revised 0.6% decline in March and a 0.1% loss in February.

Also Thursday, the Labor Department reported that new applications for jobless benefits declined by a seasonally adjusted 20,000 to 321,000 for the week ended May 14. The decline, larger than expected, was the biggest drop in claims seen in a month.

“The leading economic indicators show continued economic growth but a definite loss of forward momentum,” said Ken Goldstein, an economist at the Conference Board, a nonprofit business research group.

Economists were not worried about the fourth consecutive decline in the index because the components that offered positive signs -- such as manufacturers’ new orders for consumer goods and materials and average weekly initial claims for unemployment insurance -- are the most crucial barometers.

Also, there were special factors such as an early Easter, which hurt consumer spending in April, and turmoil in Iraq.

Given higher interest rates, “we are going to see slower growth in the second half, but if it weren’t for those special factors I would have been more concerned,” said Mark Vitner, senior economist at Wachovia Corp.

“There is clearly underlying strength in the economy,” he said, adding that the components that were strengthening “tend to give consistent readings about the direction of the economy. The ones weakening have given a lot of false signals.”