WASHINGTON – A measure of U.S. economic activity declined in August for the second time in three months, suggesting the economy remains weak.
The Conference Board says its index of leading indicators, designed to forecast future economic activity, dipped 0.1 per cent in August after rising 0.5 per cent in July and dropping 0.5 per cent in June.
The weakness in August came from declines in manufacturing orders, consumer confidence and average weekly manufacturing hours. Conference Board economist Ken Goldstein says the index depicts an economy still facing significant domestic and international weakness.
Hiring has languished this year, and the unemployment rate remains elevated at 8.1 per cent. U.S. manufacturing, which had helped pulled the economy out of the Great Recession three years ago, has weakened. Factories have been hurt by a decline in consumer spending and slower global growth that has cut demand for exports.
The overall economy grew at an annual rate of just 1.7 per cent in the April-June quarter. Many economists believe growth will stay weak in the second half of this year.
Steven Wood, chief economist at Insight Economics, said the leading indicators report suggests “economic growth over the next six to nine months should be relatively modest with little possibility of a robust rebound.”
Last week, the Federal Reserve said it would purchase $40 billion a month in mortgage-backed bonds as long as it deems necessary. The goal of the program is to stimulate the economy by making home-buying more affordable. Chairman Ben Bernanke said the Fed would keep buying the bonds until the job market improves “substantially.”