Index of Economy's Future Health Rises at Slower Pace

A gauge designed to predict the economy's future health rose in August but at a much slower pace than in July.

The Conference Board said Friday that its index of leading indicators rose 0.2 percent in August, the seventh straight increase. But that was much slower than the revised 1.1 percent gain in July.

"The leading indicators point to an economy that is gaining traction, but most likely won't repeat its stellar second quarter performance in the second half," said Conference Board economist Ken Goldstein.

The economy, as measured by the gross domestic product, grew at an annual rate of 4.2 percent in the April-June quarter after going into reverse and contracting at a 2.1 percent rate in the January-March quarter, a decline that reflected the adverse impacts of a harsh winter.

Many economists say that the economy is growing at a solid pace of around 3 percent in the current quarter and will also expand at that rate in the final three months of the year.

For August, the small gain in the leading index came from strength in financial market conditions as measured by low interest rates and a rise in factory orders.

The index is composed of 10 forward-pointing indicators. Three showed strength during the month, four declined and three were unchanged. The biggest negative factor holding the index back was a drop in applications for housing permits.