updated 5/19/2005 10:50:31 AM ET 2005-05-19T14:50:31

A closely watched gauge of future business activity fell in April, the fourth monthly decline in a row, offering more evidence that economic growth is losing some steam.

Major Market Indices

But in an encouraging sign for employment, the number of new people signing up for jobless benefits dropped sharply last week. The Labor Department reported Thursday that new applications filed for unemployment insurance declined by a seasonally adjusted 20,000 to 321,000 for the week ending May 14. The decline, larger than expected, was the biggest drop in claims seen in a month.

Meanwhile, The Conference Board said that its Composite Index of Leading Economic Indicators fell 0.2 percent last month to 114.5. The decline was in line with what analysts expected for the indicator, which is closely followed because it is meant to forecast the economy’s health over the coming three to six months.

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

“The Leading Economic Indicators show continued economic growth, but a definite loss of forward momentum,” said Ken Gold Goldstein, economist at The Conference Board.

The Conference Board reported that five of the ten components of the leading index increased in April. They included average weekly initial claims for unemployment insurance, building permits, average weekly manufacturing hours, manufacturers’ new orders for non-defense capital goods and manufacturers’ new orders for consumer goods and materials.

The components that fell were the index of consumer expectations, real money supply, interest rate spread, stock prices and vendor performances.

The index of coincident indicators, which measures the current economy, rose 0.2 percent in April to 119.6. The gain followed a 0.2 percent increase in March and a 0.1 percent increase in February. Three of the four components that make up the index rose in April. The one component that declined was industrial production.

The index of lagging indicators, which looks back at the past six months, rose 0.4 percent in April to 99.7. That was followed by a 0.2 percent decrease in March, and a 0.3 percent increase in February. Six of the seven components advanced, led by commercial and industrial loans outstanding. The negative contributor was average duration of unemployment.

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