updated 5/18/2006 2:41:04 PM ET 2006-05-18T18:41:04

A widely watched barometer of economic activity slipped in April despite projections of an increase, a private research group said on Thursday, signaling a possible stalling of the nation’s economy.

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The Conference Board said its Index of Leading Indicators fell 0.1 percent to 138.9 in April after it rose a revised 0.4 percent to 139 in March.

April’s decline came amid rising gas prices, lagging consumer confidence and increasing interest rates.

The April figure was below analyst’s expectations of a 0.1 percent increase from March.

The index is closely watched because it predicts economic activity three to six months in the future.

“It is saying what we all know: second quarter growth will fall short of the first quarter,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “And growth for the second half of the year, will be slower than the first.”

Hoffman expects GDP growth will be between 3 percent and 3.5 percent in the second quarter, and no more than 3 percent in the second half of the year.

Gary Thayer, chief economist at A.G. Edwards & Sons Inc., said several recent economic reports point toward a slowdown. For example, earlier this month the Commerce Department reported that the number of new housing projects in April dropped by 7.4 percent to a seasonally adjusted annual rate of 1.849 million units.

Consumer confidence sank to a seven-month low in early May. The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence at 67.1 in early May, deteriorating from 89.4 in April.

Energy prices also remain high, raising concerns about inflation. Oil futures fetched $69 a barrel earlier this week — 40 percent more than a year ago— but down from $75 a barrel at the end of April.

“The economy is just poised for a slowdown,” said Thayer.

Three of the ten indicators that comprise the index increased in April: vendor performance, stock prices and interest rate spread. Negative contributors were building permits, manufacturers’ new orders for nondefense goods, index of consumer expectations, average weekly claims for unemployment, real money supply and manufacturers new orders for consumer goods and materials. The average weekly manufacturing hours held steady in April.

The index of coincident indicators, which measures current economic activity, rose 0.2 percent to 122.6 percent. The index of lagging indicators, which reflects past performance, rose 0.3 percent to 122.8 percent.

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