Economy may slow this summer, data show |

Economy may slow this summer, data show

Associated Press Vail CO, Colorado
Construction workers build a new house in Palo Alto, Calif., Tuesday, May 15, 2007. Construction of new homes posted a small gain in April but applications for building permits plunged by the largest amount in 17 years, a dramatic sign that the nation's housing industry is still in a steep slump. The Commerce Department reported Wednesday, May 16, 2007 that construction of new homes and apartments rose by 2.5 percent in April compared to March to a seasonally adjusted annual rate of 1.528 million units. (AP Photo/Paul Sakuma)

NEW YORK (AP) — Higher gas prices and a sluggish housing industry are taking a toll on the economy, a gauge of future U.S. economic growth showed on Thursday.The Conference Board said its index of leading economic indicators dropped 0.5 percent, higher than the 0.1 decline analysts were expecting. The reading is designed to forecast economic activity over the next three to six months.The increase almost reversed a revised 0.6 percent climb in March, which could point to weaker growth.”The data may be pointing to slower economic conditions this summer. With the industrial core of the economy already slow, and housing mired in a continued slump, there are some signs that these weaknesses may be beginning to soften both consumer spending and hiring this summer,” said Ken Goldstein, labor economist for the Conference Board.The reading tracks 10 economic indicators. Two of those readings were positive in April: stock prices and real money supply.The negative contributors, beginning with the largest, were building permits, weekly unemployment claims, manufacturers’ new orders for non-defense capital goods, consumer expectations, vendor performance, average weekly manufacturing hours and interest rate spread.With the latest decline, the cumulative change in the index over the past six months has dropped 0.2 percent.Brian Bethune, an economist with Global Insight, said the data indicate the “economy is pretty much hovering right now.”Still, he said the positive contributors – stock prices and real money supply – may point toward a pickup in growth later in the year.”Stock prices in particular are anticipating what activity is going to be like in the future,” Bethune said.The Labor Department also reported a surprise drop in jobless claims Thursday, which suggested that the employment market is stronger than many economists anticipated. The number of U.S. workers filing new claims for jobless benefits fell for a fifth straight week to the lowest level in four months.Stocks retreated modestly in midmorning trading. The Dow Jones industrial average fell 4.39, or 0.03 percent, to 13,483.14, after reaching its 23rd record close of the year on Wednesday.Broader indexes declined as well. The Standard & Poor’s 500 index fell 1.63, or 0.11 percent, to 1,512.51, and the Nasdaq composite index fell 4.33, or 0.17 percent, to 2,543.09.

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