NEW YORK - A key predictor of economic health had its biggest decline in four years in February, suggesting that higher interest rates are beginning to cool the nation's torrid economic growth.
The Conference Board's index of leading economic indicators, a measure designed to predict the health of the economy six months ahead, fell 0.3% to 106.0 in February, compared with January's revised 0.2% gain. The index stood at 100 in 1992.
The Conference Board said the drop was the largest since January 1996.
An increase in the index suggests economic growth, and a decrease sustained over several months implies a slowdown. The February decline was the first drop since last September.
Eight out of the 10 components that make up the index fell. Higher interest rates, fewer building permits, and fewer orders for nondefense capital goods were the main factors behind the decline, according to the Conference Board.
"The biggest risk to the ongoing expansion continues to be interest rate increases and the prospect of still more Federal Reserve Board action," said Ken Goldstein, economist at the New York-based research group. "The data now suggest some sectors are beginning to respond to the Fed tightening, but certainly not enough to prevent the economy from reaching new records for longevity."