WASHINGTON -- The government's main economic forecasting index was flat in August after six straight increases dating to the period immediately after the Persian Gulf war, the Commerce Department reported yesterday.
The unchanged reading for the index of leading indicators, combined with a small decline in a companion index that gauges current business activity, was seen by many analysts as dimming prospects for the economy as the Federal Reserve's policy-setting body met to set monetary policy for the next five weeks.
"The message is that the economy seems to have lost some momentum over the summer," said Robert T. McGee, senior vice president of the Tokai Bank Ltd. in New York. "You can see why the Fed and the Bush administration are concerned."
Nevertheless, Mr. McGee and most other private analysts still say the recession ended some months ago and that a clear recovery in manufacturing will be augmented before long by a revival of consumer spending.
A private-sector predictive index compiled by Josephthal & Co. climbed to 81 in August from 77 in July and 49 in June, far above the low point of minus 114 reached in October 1990.
"I think the turn is for real," said David B. Bostian Jr., economist for the Wall Street firm.
Another report yesterday supported the signs of strength among the nation's manufacturers. The National Association of Purchasing Management said that its September index of activity in the industrial sector, a precursor of business activity, climbed to 55 from 54.8.
The Commerce Department, however, reported that construction spending was lackluster. Homebuilding was the only positive sector as overall spending on new construction recorded a rise for August of 0.3 percent, to an annual rate of $406.2 billion, slightly above the $404.9 billion of July.
Of the 11 components of the Commerce Department's leading index, four made positive contributions, paced by a rise in manufacturers' unfilled orders for durable goods. Six components fell.
The coincident index, meanwhile, edged down 0.1 percent after showing no change in July.