The Conference Board's (search) Index of Leading Indicators, a closely watched measure of future economic activity fell in July for the second consecutive month, reinforcing evidence that the nation's financial recovery is slackening.

The Conference Board said Thursday its Composite Index of Leading Economic Indicators (search) dropped by 0.3 percent in July to 116.0, following a revised decline of 0.1 percent in June. Last month was the first time in more than a year that the index had lost ground.

"The latest decline in the Leading Index reflects a loss of forward momentum," said Ken Goldstein, economist for the Conference Board. "There are growing concerns about the high cost of gasoline and milk, as well as worries about where economic growth will come from now that tax refunds have been spent and short-term interest rates are rising."

The index is closely followed because it is designed to forecast the economy's health over the coming three to six months.

The New York-based Conference Board said six of the 10 indicators that make up the index declined in July. They included vendor performance, the interest rate spread, stock prices, average weekly initial claims for unemployment insurance, real money supply and manufacturers' new orders for nondefense capital goods.

The components that rose were building permits, the index of consumer expectations, average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials.

The index of coincident indicators (search), which measures the current economy, rose 0.1 percent in July to 117.5, with all four of its components also rising, after remaining steady in June.

The index of lagging indicators, which looks back at the past six months, rose 0.5 percent in July to 98.3, after coming in flat in June