The index, designed to forecast economic trends six to nine months in advance, fell a revised 0.1 percent in May. The board's index of coincident indicators rose 0.1 percent while the lagging indicators rose 0.6 percent. Together, the three indexes "show a moderating economy," the board said.
Most of the decline in the leading index in June reflected a large increase in first-time unemployment claims from the strike against General Motors. The strike was settled last week, but its effects will continue to be analyzed in the economic data for months to come.
"The other components of the leading index are mixed," said Michael Boldin, director of consumer research at the Conference Board, a New York-based private business research group. He said the slowdown will be sustained, "but it is too early to consider this a recession warning." The board said the index shows only a slight risk of contraction.
Six of the 10 indicators in the leading index fell in June. The biggest drag on the index came from jobless claims, while the biggest boost came from the money supply numbers.
Separately, a Treasury Department official said the domestic economy is on track for steady, if moderating, growth. John Auten, director of the Treasury's financial analysis office, told the department's borrowing advisory committee that the second-quarter slowdown was primarily due to an inventory correction and the Asian crisis.
Inflation continues to be controlled, Auten said. He said Asia is the biggest uncertainty in the economy. His remarks came one day after the Treasury said it expects to pay down $45 billion in the federal debt during the July through September quarter and will borrow about $10 billion to $15 billion net in the October through December quarter as the government enjoys its rare surplus.
On Wednesday, the Treasury will announce the schedule of its quarterly refunding auctions.
Written By Rex Nutting