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Sat, Mar 31, 2001 EST
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Leading Economic Indicators Drop 0.3 Percent
By Lisi De Bourbon   Associated Press
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NEW YORK — Although a key gauge of economic activity fell 0.3 percent in February, the U.S. economy so far has avoided slipping into a recession, the Conference Board said Thursday.

The New York-based private research group said its Index of Leading Economic Indicators decreased to 108.7 last month after increasing a revised 0.5 percent in January.

While the leading index declined in four of the last five months, it has not declined enough to signal a recession, the group said.

Nonetheless, the Conference Board provided little encouragement that the economy would rebound any time soon.

"The Leading Economic Index suggests that this period of slower growth will probably continue for the next few months," said Ken Goldstein, economist for the Conference Board.

Other economists agreed, said the report comes as no surprise and that it simply confirms that the economy is weak.

"The Leading Economic Index is basically telling us what we already know," said Bruce Steinberg, chief economist at Merrill Lynch. "Despite the declines in the index, the economy is growing, although very slowly."

In a separate report released Thursday, the Labor Department reported that new claims for state unemployment insurance dipped last week, but still hovered at a level suggesting that employers' demand for workers has eased.

The markets were mixed following the release of the reports. The Dow Jones industrial average was off 136.28 at 9,350.72 — joining the other major market indicators in bear market territory — more than 20 percent off its high. The Nasdaq composite index was down slightly early Thursday, falling 6.10 to 1,824.13

The Conference Board said five of the ten indicators that make up the leading index increased in February: money supply, interest rate spread, vendor performance and manufacturers' new orders for both nondefense capital goods and materials as well as consumer goods.

The negative contributors to the index were average weekly initial claims for unemployment insurance, index of consumer expectations, average weekly manufacturing hours, stock prices and building permits.

Three of the four components in the coincident indicators, which measures current economic activity, also increased, helping the index rise 0.1 percent to 116.5.

The index of lagging indicators, which reflects changes that have already occurred, decreased 0.4 percent in February to 107.1.

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