updated 4/21/2005 11:47:20 AM ET 2005-04-21T15:47:20

A closely watched index forecasting future business activity fell in March, a sign that the nation’s economic growth may be slowing.

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The Conference Board reported Thursday that its Composite Index of Leading Economic Indicators fell 0.4 percent last month to 115.1. The decline was slightly larger than that expected by analysts, who had forecast a 0.3 percent drop in the index.

The March drop followed a rise of 0.1 percent in February, and a revised 0.3 percent decline in January.

“The economy is expanding but at a pace that is choppy,” said Ken Goldstein, an economist for the New York-based private research group. “Energy prices are again being blamed for potentially leading the economy into a soft patch. Of more concern has been the modest levels of confidence — both consumer and business confidence.”

The economy continued to expand moderately through the first quarter of the year, reflected by a rise in a companion index of coincident indicators, Goldstein said.

But the decline in the leading index after an extended rise points to an economy that, while likely to continue expanding in coming months, will do so at a slower rate, the Board said.

The index of leading indicators has been rising since the end of 2001, although that trend has been interrupted twice before.

The Conference Board said that eight of the 10 components of the leading index declined in March, lead by average weekly first-time claims for unemployment benefits, building permits and vendor performance. The only two components that rose were the interest rate spread and manufacturers’ new orders for consumer goods and materials.

The index of coincident indicators, designed to measure current activity, rose 0.2 percent in March to 119.5, after a revised 0.1 percent increase in February and a decline of 0.5 percent in January.

The Board’s index of lagging indicators, measuring the economic activity of the months just past, declined 0.1 percent to 99.4.

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