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GROWTH INDEX OF ECONOMY ROSE IN AUGUST

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An index of future economic growth rose for a seventh consecutive month in August, reaching another new high amid rekindled fears of inflation.

Tuesday's Conference Board report of a 0.2 percent increase in the Index of Leading Economic Indicators comes a week after the Federal Reserve decided to leave interest rates unchanged, apparently believing that the economy was slowing on its own and not threatening a resurgence of higher inflation.The August reading of 103.2 in the report compiled by the business-sponsored research group followed a 0.2 percent gain in July, a 0.5 percent gain in June and a 0.2 percent increase in May. The August rise was within Wall Street expectations of a gain of 0.1 percent to 0.2 percent.

There was little initial impact on Wall Street, where bond prices edged higher after the figures were released.

It was the seventh straight increase for the index, surpassing last month's record of 103.1. Analysts generally consider three months of movement in the same direction to be indicative of a trend.

The index is designed to forecast economic activity six to nine months in advance. It is seen by economists, however, as most useful in forecasting the economy's direction rather than its pace.

Of the index's 11 components, nine rose in August. The most significant gains came in sensitive materials prices, stock prices, average weekly initial claims for state unemployment insurance and vendor performance. The most notable declines came in manufacturers' unfilled orders for durable goods and contracts and orders for plant and equipment, the Conference Board reported.