A gauge of future economic activity rose 0.4 percent in May, signaling slow growth in the U.S. economy lies ahead in the summer and fall.
The leading economic index from the Conference Board, a private research group, is designed to forecast economic activity in the next three to six months.
Economists polled by Thomson Reuters had expected an increase of 0.5 percent in May.
The index has been mostly rising since April 2009, tugged higher by the increasing amount of money in the economy, the rebound in manufacturing and slow improvements in the job market.
Another big boost to the leading indicators has been the difference between 10-year interest rates and the overnight interest rate that the Federal Reserve has kept at a record low near zero. A wide gap between the two can mean investors expect economic activity to pick up.
A stock market rally for much of last year and a boost to the housing market from a federal tax credit, now expired, had also helped.
But turmoil in stock markets and renewed weakness in the housing market weighed on the index in May. Without government tax support for homebuyers, applications to build homes are sliding again. A debt crisis and the prospect of stagnating economies in Europe spooked investors, triggering volatile trading in stock markets.
Five of the index's 10 components improved last month, and five deteriorated.
"The index points to continued, though slower, U.S. growth for the rest of the year," said Bart Van Ark, chief economist of the Conference Board, in a statement. "We project a serious slowdown in European growth in 2011, which could further weaken the U.S. outlook."
The Conference Board revised its reading for April to no change from a 0.1 percent drop. It also revised its March reading to a 1.4 percent gain from a 1.3 percent rise.
