A key gauge of the direction of the U.S. economy dropped 0.5 percent last month, resuming a slide that began in January after a standstill in April, the Conference Board (search) said on Monday.

The New York-based private research group said its index of leading indicators (search) fell to 114.1 in May, signaling a slower pace of U.S. economic growth in the third quarter.

May's drop was larger than the 0.3 percent decline Wall Street economists had expected. However, the Conference Board revised April's index upward to an unchanged reading from a previously reported decline of 0.2 percent.

Only one of the 10 indicators in the index — stock prices — increased in May.

"This is not just a domestic phenomenon," Conference Board economist Ken Goldstein said in a statement, noting similar softness in six of the eight countries for which the group has leading indexes.

"Energy prices are one factor driving this global trend," he said. "Of more concern is the level of confidence of both consumers and chief executives, which has been choppy."

The U.S. index has declined at a 2.2 percent annual rate over the last six months and has dropped 1.9 percent over the past year.

About half of the decline over the last 12 months is due to the narrowing spread between short-term and long-term interest rates, the Conference Board said.

Economists are divided on the degree to which this might presage slower growth ahead, and the Conference Board said it would be changing the way it constructs the index so that the yield curve would only subtract from the index if long rates were to move below short rates.

"We continue to believe that the leading index is a poor leading indicator of the economy," said Stephen Stanley, chief economist at RBS Greenwich Capital.

The coincident index of current economic activity rose 0.2 percent for the second straight month in May. The lagging index, which measures past economic activity, increased 0.3 percent, building on a 0.1 percent April gain.