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Leading indicators fall 0.2% in August

Slowdown not seen leading to recession

WASHINGTON --A closely watched gauge of future economic activity slipped for a second straight month, a performance viewed as signaling a slowdown but not a recession.

The Conference Board reported yesterday that its index of leading economic indicators fell 0.2 percent in August following a similar decline in July.

The index has fallen in four of the past five months, illustrating the battering the economy has taken from increases in energy prices and interest rates and the continued plunge in the housing market.

``There is definitely a slowdown that is being led by a recession in residential construction," said Allen Sinai, chief global economist at Decision Economics. ``While the risks of a full-fledged recession have grown, at the moment it looks like it will be a shift to a lower growth path but nothing worse."

Wall Street, taking a more pessimistic view, focused on a report that manufacturing activity dropped sharply in the latest survey by the Federal Reserve's Philadelphia regional bank. The index of current activity in the Philadelphia region fell from 18.5 in August to negative 0.4 in September, the first negative reading since April 2003.

Investors, worried this could signal that manufacturing is beginning to falter, sent the Dow Jones industrial average down 76.96 points to close at 11,533.23.

Many analysts believe the recent declines in the price of gasoline and other energy products will help cushion the downturn . Gasoline, which had soared to above $3 per gallon, is around $2.50 .

Weighing against the fall in energy prices has been a further decline in housing activity. The government reported this week that construction of new homes and apartments fell 6 percent in August to the slowest pace in more than three years.

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