A private business group's measure of the US economy's health showed the largest drop in one year as stocks fell, new building permits declined and unemployment rose. The New York-based Conference Board's said Thursday its monthly forecast of future economic activity fell 0.7 percent in July, far short of the consensus estimate of a 0.2 percent decline by Wall Street economists surveyed by Thomson/IFR. The last time the index showed a drop this great was last August, when it fell by 1 percent. Revised June data showed no change to the index, which has slipped 0.9 percent for the six months ending in July. The decline was the steepest in the index this year. The largest drag on the index was the decline in building permits, followed in order by stock prices, rising unemployment claims, a tightened money supply and falling manufacturers' orders for consumer goods. Interest rate spreads, consumer expectations and manufacturers' orders for capital goods all contributed to the index. Stocks, which were down before the index's release, cut some of their losses. The Dow Jones industrial average was down 45.51 at 11,371.92 in midmorning trading. Meanwhile, the number of newly laid-off US workers seeking unemployment benefits fell more than expected last week, the second straight drop from a six-year high, according to government data released Thursday. The Labor Department reported that applications for jobless benefits dropped to 432,000, down by 13,000 from the previous week. It was a bigger improvement than analysts expected. But claims remain elevated compared with recent years. The four-week average climbed to 445,750, the highest level in almost seven years. Unemployment claims have increased in the past several weeks, partly reflecting an outreach effort by the Labor Department to notify people of a 13-week benefit extension approved by Congress in June. The action has turned up some people eligible to file new claims, according to the department. That effort - coupled with businesses cutting jobs due to higher energy costs, tighter credit markets and a slowing economy - caused claims to spike to a six-year high of 457,000 for the week of Aug. 2, the largest total since claims surged to 479,000 in March 2002. The increase more than six years ago occurred the last time Congress extended benefits to deal with the impact of soaring layoffs due to a weak economy. The number of people continuing to receive benefits last week also dropped slightly to 3.36 million, but the four-week average rose to 3.33 million, its highest level in almost five years. That number doesn't include the government's extended benefits program. The Labor Department estimated an additional 1.29 million unemployed workers are getting benefits under that program. Several companies announced job cuts recently.
