By CANDICE CHOI, AP Business Writer 7 minutes ago
NEW YORK - U.S. economic growth is likely to slow in coming months as the ongoing slump in the housing industry takes a deeper toll on businesses and consumers, a gauge of future business activity showed Thursday.
The Conference Board said its index of leading economic indicators fell 0.3 percent in June, higher than the 0.1 percent drop analysts were expecting and more than reversing last month's revised growth of 0.2 percent.
The Conference Board report, designed to forecast economic activity over the next three to six months, tracks 10 economic indicators.
The five negative contributors, beginning with the largest, were building permits, unemployment claims, consumer expectations, vendor performance and interest rate spread.
The positive contributors, starting with the largest, were weekly manufacturing hours, new orders for non-defense capital goods and stock prices. Manufacturers' orders for consumer goods and materials and real money supply held steady in June.
With the latest report, the cumulative change in the index over the past six months has dropped 0.7 percent.
In his midyear economic report to Congress Wednesday, Federal Reserve Chairman Ben Bernanke said that if the housing slump turns out worse than expected, consumer spending may drop and weaken overall economic growth.
Bernanke also said growth for the year will be slower than the central bank projected in February.
Another risk to the economy is if energy prices continue to rise sharply, Bernanke said. That could raise prices of goods and services, spreading inflation through the economy.
Stocks traded higher Thursday, following some upbeat earnings reports. The Dow rose 0.69 percent to 14.013.74.
Broader stock indicators rose. The Standard & Poor's 500 index advanced 8.88, or 0.57 percent, to 1,555.05, while the Nasdaq composite index rose 0.75 percent to 2,719.83.